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entitled 'Human Capital: DOD Needs to Improve Implementation of and
Address Employee Concerns about Its National Security Personnel System'
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2008:
Human Capital:
DOD Needs to Improve Implementation of and Address Employee Concerns
about Its National Security Personnel System:
GAO-08-773:
GAO Highlights:
Highlights of GAO-08-773, a report to congressional committees.
Why GAO Did This Study:
The Department of Defense (DOD) has begun implementing the National
Security Personnel System (NSPS), its new human capital system for
managing civilian personnel performance. As of May 2008, about 182,000
civilian employees were under NSPS. DOD’s implementation of NSPS will
have far-reaching implications for DOD and civil service reform across
the federal government. Based on our prior work looking at performance
management in the public sector and DOD’s challenges in implementing
NSPS, GAO developed an initial list of safeguards that NSPS should
include to ensure it is fair, effective, and credible. Congress
required GAO to determine (1) the extent to which DOD has implemented
internal safeguards to ensure the fairness, effectiveness, and
credibility of NSPS; and (2) how DOD civilian personnel perceive NSPS
and what actions DOD has taken to address these perceptions. To conduct
this work, GAO analyzed relevant documents and employee survey results;
interviewed appropriate officials; and conducted discussion groups with
employees and supervisors at 12 selected installations.
What GAO Found:
While DOD has taken some steps to implement internal safeguards to
ensure that NSPS is fair, effective, and credible, the implementation
of some safeguards could be improved. Specifically, DOD has taken steps
to (1) involve employees in the system’s design and implementation, (2)
link employee objectives and agency goals, (3) train employees on the
system’s operation, (4) require ongoing performance feedback between
supervisors and employees, (5) better link individual pay to
performance, (6) allocate agency resources for the system, (7) include
predecisional safeguards to determine if rating results are fair and
nondiscriminatory, (8) provide reasonable transparency, and (9) provide
meaningful distinctions in employee performance. GAO believes continued
monitoring of all of these safeguards is needed to ensure that DOD’s
actions are effective as more employees become covered by NSPS. GAO
also determined that DOD could immediately improve its implementation
of three safeguards. First, DOD does not require a third party to
analyze rating results for anomalies prior to finalizing employee
ratings, and therefore it is unable to determine whether ratings are
fair and nondiscriminatory before they are finalized. Second, the
process lacks transparency because DOD does not require commands to
publish final rating distributions, though doing so is recognized as a
best practice by DOD and GAO. Third, NSPS guidance may discourage
rating officials from making meaningful distinctions in employee
ratings because it indicated that the majority of employees should be
rated at the “3” level, on a scale of 1 to 5, resulting in a hesitancy
to award ratings in other categories. Without steps to improve
implementation of these safeguards, employee confidence in the system
will ultimately be undermined.
Although DOD employees under NSPS are positive regarding some aspects
of performance management, DOD does not have an action plan to address
the generally negative employee perceptions of NSPS. According to DOD’s
survey of civilian employees, employees under NSPS are positive about
some aspects of performance management, such as connecting pay to
performance. However, employees who had the most experience under NSPS
showed a negative movement in their perceptions. For example, the
percent of NSPS employees who believe that NSPS will have a positive
effect on DOD’s personnel practices declined from 40 percent in 2006 to
23 percent in 2007. Negative perceptions also emerged during discussion
groups that GAO held. For example, employees and supervisors were
concerned about the excessive amount of time required to navigate the
process. Although the Office of Personnel Management issued guidance
recommending that agencies use employee survey results to provide
feedback to employees and implement an action plan to guide their
efforts to address employee assessments, DOD has not developed an
action plan to address employee perceptions. While it is reasonable for
DOD to allow employees some time to accept NSPS because organizational
changes often require time to adjust, it is prudent to address
persistent negative employee perceptions. Without such a plan, DOD is
unable to make changes that could result in greater employee acceptance
of NSPS.
What GAO Recommends:
GAO is recommending that DOD improve the implementation of some
safeguards and develop and implement an action plan to address employee
concerns about NSPS. DOD generally concurred with our recommendations,
with the exception of one requiring predecisional review of ratings.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-773]. For more
information, contact Brenda S. Farrell at (202) 512-3604 or
farrellb@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
DOD Has Taken Steps to Implement Internal Safeguards to Ensure Fairness
of NSPS; However, Implementation of Some Safeguards Could Be Improved:
Although DOD Civilian Employees under NSPS Identified Some Positive
Aspects of the System, DOD Does Not Have a Plan for Addressing the
Generally Negative Employee Perceptions of NSPS:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Example of Linking Performance to Mission and Objectives:
Appendix III: Additional Responses to 2007 Status of Forces Survey of
DOD Civilian Employees:
Appendix IV: Other Themes Discussed by Department of Defense Civilians
during GAO Discussion Groups:
Appendix V: Comments from the Department of Defense:
Appendix VI: GAO Contact and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: Number of DOD Civilian Employees Phased into NSPS, as of May
2008:
Table 2: Percentage of Employees in Each Rating Category by DOD and Pay
Pools Visited:
Table 3: Estimated Percentage of Responses from Status of Forces Survey
for DOD Civilian Employees, May 2007:
Table 4: Estimated Percentage of Spiral 1.1 Employees’ Responses for
Select Questions from the May 2007, November 2006, and May 2006
Administrations of the Status of Forces Survey for DOD Civilian
Employees:
Table 5: Composition of Discussion Groups:
Table 6: Composition of Discussion Groups by Demographic Category per
Component:
Table 7: Estimated Percentage of Employees Responding to Questions
about Overall Satisfaction and Leadership and Management in May 2007
Status of Forces Survey-Civilian:
Table 8: Estimated Percentage of Employees Responding to Questions
about Leadership and Management, Motivation/Development/Involvement,
and Performance Management in May 2007 Status of Forces Survey-
Civilian:
Table 9: Estimated Percentage of Employees Responding to Question about
Performance Management in May 2007 Status of Forces Survey-Civilian:
Table 10: Estimated Percentage of Employees Responding to Question
about Performance Management in May 2007 Status of Forces Survey-
Civilian:
Table 11: Estimated Percentage of Employees Responding to Questions
about Retention and Commitment in May 2007 Status of Forces Survey-
Civilian:
Table 12: Estimated Percentage of Employees Responding to Questions
about the National Security Personnel System in May 2007 Status of
Forces Survey-Civilian:
Table 13: Estimated Percentage of Employees Responding to Questions
about the National Security Personnel System in May 2007 Status of
Forces Survey-Civilian:
Table 14: Additional Themes that Emerged during Discussion Groups with
Select Employees:
Figures:
Figure 1: NSPS Design and Implementation Team Organization:
Figure 2: Phases of NSPS Performance Management Process:
Figure 3: Example of NSPS Pay Pool Organization:
Figure 4: Example of Linking Performance to Mission and Objectives:
Abbreviations:
DOD: Department of Defense:
NSPS: National Security Personnel System:
SOFS: Status of Forces Survey:
PEO: Program Executive Office:
PAA: Performance Appraisal Application:
DMDC: Defense Manpower Data Center:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 10, 2008:
Congressional Committees:
In 2007, we reported that strategic human capital management remained a
high-risk area because the federal government now faces one of the most
significant transformations to the civil service in half a century, as
momentum grows toward making governmentwide changes to agency pay,
classification, and performance management systems.[Footnote 1] The
Department of Defense (DOD) is in the initial stages of implementing
its new human capital system for managing civilian personnel--the
National Security Personnel System (NSPS). NSPS significantly
redesigned the rules, regulations, and processes that govern the way
that civilian employees are hired, compensated, and promoted at DOD. As
a result, DOD is in a period of transition and faces an array of
challenges and opportunities to enhance performance, ensure
accountability, and position itself for the future.
In a series of testimonies prior to the enactment of the NSPS
legislation in 2003, we raised a number of critical issues about the
proposed regulations for NSPS.[Footnote 2] Since then, we have provided
congressional committees with insight on DOD's process to design its
new personnel management system, the extent to which DOD's process
reflects key practices for successful transformation, the need for
internal controls and transparency of funding, and the most significant
challenges facing DOD in implementing NSPS.[Footnote 3] While GAO
supports human capital reform in the federal government, how such
reform is done, when it is done, and the basis upon which it is done
can make all the difference in whether such efforts are successful.
Specifically, we have noted in testimonies and reports that DOD and
other federal agencies must ensure that performance management systems
contain appropriate internal safeguards, such as assuring reasonable
transparency in connection with the results of the performance
management process. We developed an initial list of safeguards based on
our extensive body of work looking at the performance management
practices used by leading public sector organizations both in the
United States and in other countries as well as on our experiences in
implementing a modern performance management system for our own staff
at GAO.[Footnote 4] Implementing internal safeguards is a way to ensure
that pay-for-performance systems in the government are fair, effective,
and credible.[Footnote 5] Additionally, we reported that the
implementation of NSPS will have far-reaching implications, not just
for DOD, but for civil service reform across the federal government
because NSPS could serve as a model for governmentwide transformation
in human capital.
In light of these challenges and implications, in March 2007 the Senate
Armed Services Committee asked us to review the implementation of the
NSPS performance management system to determine the extent to which DOD
has effectively incorporated internal safeguards that we had previously
identified as key to successful implementation of performance
management systems in the federal government and assess employee
attitudes toward NSPS. Further, the National Defense Authorization:
Act for Fiscal Year 2008[Footnote 6] required us to determine the
extent to which DOD has effectively incorporated accountability
mechanisms and internal safeguards in NSPS and to assess employee
attitudes toward NSPS. We assessed the extent to which DOD's
performance management system has incorporated the following
safeguards:[Footnote 7]
* Involve employees, their representatives, and other stakeholders in
the design of the system, to include employees directly involved in
validating any related implementation of the system.
* Assure that the agency's performance management system links employee
objectives to the agency's strategic plan, related goals, and desired
outcomes.
* Implement a pay-for-performance evaluation system to better link
individual pay to performance, and provide an equitable method for
appraising and compensating employees.
* Provide adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the performance
management system.
* Institute a process for ensuring ongoing performance feedback and
dialogue between supervisors, managers, and employees throughout the
appraisal period, and setting timetables for review.
* Assure that certain predecisional internal safeguards exist to help
achieve consistency, equity, nondiscrimination, and nonpoliticization
of the performance management process (e.g., independent reasonableness
reviews by a third party or reviews of performance rating decisions,
pay determinations, and promotions before they are finalized to ensure
that they are merit-based, as well as pay panels who consider the
results of the performance appraisal process and other information in
connection with final pay decisions).
* Assure that there are reasonable transparency and appropriate
accountability mechanisms in connection with the results of the
performance management process, including periodic reports on internal
assessments and employee survey results relating to performance
management and individual pay decisions while protecting individual
confidentiality.
* Assure that the agency's performance management system results in
meaningful distinctions in individual employee performance.
* Provide a means for ensuring that adequate agency resources are
allocated for the design, implementation, and administration of the
performance management system.
To address this congressional request and mandate, we established the
following objectives: (1) To what extent has DOD implemented
accountability mechanisms and internal safeguards to ensure the
fairness, effectiveness, and credibility of NSPS; and (2) How do DOD
civilian personnel perceive NSPS and what actions has DOD taken to
address these perceptions?
To determine the extent to which DOD had implemented safeguards to
ensure the fairness, effectiveness, and credibility of NSPS, we
identified safeguards specified in the National Defense Authorization
Act for Fiscal Year 2008, as well as other safeguards GAO has
previously identified as key internal safeguards, and analyzed
regulations and other guidance provided by officials in DOD and the
four components' headquarters--the Army, Navy, Air Force, and Fourth
Estate.[Footnote 8] We also reviewed documents, such as pay pool
business rules and regulations obtained during 12 site visits--3 for
each component--to military installations. Further, we interviewed
appropriate agency officials at various levels within DOD and conducted
interviews with officials of various management levels at each site we
visited. The sites were selected because they contained a large number
or concentrated group of civilian employees that had been placed under
NSPS and were geographically distributed throughout the United States.
In addition, to determine how DOD civilian employees' perceive NSPS, we
analyzed the results of DOD's May 2006, November 2006, and May 2007
Status of Forces Survey (SOFS) of civilian employees. These surveys
gauge initial employee attitudes toward NSPS and in our analysis, we
begin to identify trends.[Footnote 9] Further, we assessed DOD's survey
methodology and found that DOD's surveys of DOD civilians were
generally conducted in accordance with standard research practices;
however, there were some areas that could be improved. We also
conducted small group discussions with employees and supervisors at
each of the 12 sites we visited. While the information from our
discussion groups is not generalizable to the entire population of DOD
civilians, it provides valuable insight into civilians' perceptions
about the implementation of NSPS. For more information about our scope
and methodology, see appendix I. We conducted this performance audit
from August 2007 to July 2008 in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide
a reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Results in Brief:
While DOD has taken some steps to implement internal safeguards to
ensure that the NSPS performance management system is fair, effective,
and credible, the implementation of some of these safeguards could be
improved. Specifically, DOD has taken some steps to (1) involve
employees in the system's design and implementation; (2) link employee
objectives and the agency's strategic goals and mission; (3) train and
retrain employees in the system's operation; (4) provide ongoing
performance feedback between supervisors and employees; (5) better link
individual pay to performance in an equitable manner; (6) allocate
agency resources for the system's design, implementation, and
administration; (7) include predecisional internal safeguards to
determine whether rating results are consistent, equitable, and
nondiscriminatory; (8) provide reasonable transparency of the system
and its operation; and (9) impart meaningful distinctions in individual
employee performance. For example, all 12 sites we visited trained
employees on NSPS, and the DOD-wide tool used to compose self-
assessments links employees' objectives to the commands' or agencies'
strategic goals and mission. We believe continued monitoring of all of
these safeguards is needed to ensure that DOD's actions are effective
as implementation proceeds and more employees become covered by NSPS.
We also determined that DOD could immediately improve its
implementation of three safeguards: predecisional internal safeguards,
reasonable transparency, and meaningful distinctions in employee
performance. First, DOD is unable to determine whether NSPS rating
results are nondiscriminatory before they are finalized because it does
not require a third party to analyze the predecisional rating results
for anomalies. According to Program Executive Office (PEO) officials,
DOD does not require a predecisional analysis because of concerns that
pay pool panels might adjust their results even if assessments did not
warrant changes. PEO officials also stated that DOD's analysis of final
results by demographics is sufficient to ensure fairness and
nondiscrimination. Second, employees at some installations do not have
transparency over the final results of the performance management
process because DOD does not require commands to publish rating
distributions for employees. In fact, 3 of the sites we visited decided
not to publish the overall final rating and share distribution results.
Third, NSPS performance management guidance may discourage rating
officials from making meaningful distinctions in employee performance
because this guidance emphasized that most employees should be
evaluated as a "3" (or "valued performer") on a scale of 1 to 5.
According to NSPS implementing issuance, rating results should be based
on how well employees complete their job objectives using the
performance indicators. Although DOD and most of the installations we
visited emphasized that there was not a forced distribution of ratings,
some pay pool panel members acknowledged that there was a hesitancy to
award employee ratings in categories other than "3". Until DOD
effectively implements these three safeguards, employees will not have
assurance that NSPS is fair, equitable, and credible, which ultimately
could undermine employees' confidence and result in failure of the
system. We are recommending that DOD improve the implementation of
these three safeguards by (1) requiring a third party to perform
predecisional demographic and other analysis as appropriate for pay
pools, (2) requiring overall final rating results to be published, and
(3) encouraging pay pools and supervisors to use all categories of
ratings as appropriate. In commenting on a draft of this report, DOD
concurred with our recommendation to require overall final rating
results to be published and partially concurred with our recommendation
to encourage pay pools and supervisors to use all categories of ratings
as appropriate. DOD did not concur with our recommendation to require a
third party to perform predecisional demographic analysis as
appropriate for pay pools, noting, among other things, that
postdecisional analysis of results is more useful to identify barriers
and corrective actions. We, however, continue to believe that our
recommendation has merit and that identifying an anomaly in the ratings
prior to finalizing them would allow management to investigate the
situation and determine whether any non-merit-based factors contributed
to the anomaly.
Although DOD employees under NSPS are positive regarding some aspects
of the NSPS performance management system, DOD does not have an action
plan to address the generally negative employee perceptions of NSPS
identified in both the department's SOFS for civilian employees and
discussion groups we held at 12 select installations. According to our
analysis of DOD's most recent survey from May 2007, NSPS employees
expressed slightly more positive attitudes than their DOD colleagues
who remain under the General Schedule system about some goals of
performance management, such as connecting pay to performance and
receiving feedback regularly. For example, an estimated 43 percent of
NSPS employees compared to an estimated 25 percent of all other DOD
employees said that pay raises depend on how well employees perform
their jobs.[Footnote 10] However, responses from NSPS employees with
the most experience under NSPS showed a downward movement in their
attitude toward other elements of the system. For example, the
estimated percentage of employees who agreed that their performance
appraisal was a fair reflection of their performance declined from 67
percent in May 2006 to 52 percent May 2007. In addition, the percent of
NSPS employees who believe that NSPS will have a positive effect on
DOD's personnel practices dropped from 40 percent in May 2006 to 23
percent in 2007. Our focus group meetings gave rise to views consistent
with DOD's survey results. While some civilian employees and
supervisors under NSPS seemed optimistic about the intent of the
system, most of the DOD employees and supervisors we spoke with
expressed a consistent set of wide-ranging concerns. Specifically,
employees noted: (1) NSPS's negative impact on employee motivation and
morale, (2) the excessive amount of time and effort required to
navigate the performance management process, (3) the potential
influence that employees' and supervisors' writing skills have on
panels' assessments of employee ratings, (4) the lack of transparency
and understanding of the pay pool panel process, and (5) the rapid pace
at which the system was implemented, which often resulted in employees
feeling unprepared and unable to find answers to their questions. These
negative attitudes are not surprising given that organizational
transformations often entail fundamental and radical change that
require an adjustment period to gain employee acceptance and trust. To
address employee attitudes and acceptance, the Office of Personnel
Management issued guidance that recommends--and we believe it is a best
practice--that agencies use employee survey results to provide feedback
to employees and develop and implement an action plan that guides their
efforts to address the results of employee assessments. However,
according to PEO officials, DOD has not developed a specific action
plan to address critical issues identified by employee perceptions,
because they want employees to have more time under the system before
making changes. Without such a plan, DOD is unable to make changes that
address employee perceptions that could result in greater employee
acceptance and, ultimately, the successful implementation of the
performance management system. We are recommending that DOD develop and
implement a specific action plan to address employee perceptions of
NSPS ascertained from DOD's surveys and employee focus groups. The plan
should include actions to mitigate employee concerns about, for
example, the potential influence that employees' and supervisors'
writing skills have on the panels' assessment of employee ratings or
other issues consistently identified by employees or supervisors. DOD
partially concurred with our recommendation, noting that it will
address areas of weakness identified in its comprehensive, in progress
evaluation of NSPS and is institutionalizing a continuous improvement
strategy.
Background:
The National Defense Authorization Act for Fiscal Year 2004 provided
DOD with the authority to establish a pay-for-performance management
system as part of NSPS.[Footnote 11]DOD established a team to design
and implement NSPS and manage the transformation process. In April
2004, the Secretary of Defense appointed an NSPS Senior Executive to,
among other things, design, develop, and implement NSPS. Under the
Senior Executive's authority, the Program Executive Office (PEO) was
established as the central policy and program office for NSPS. The
PEO's responsibilities includes designing the human resource/pay-for-
performance systems, developing communication and training strategies,
modifying personnel information technology, and preparing joint
enabling regulations and internal DOD implementing regulations. As the
central DOD-wide program office, the PEO directs and oversees the
components' NSPS program managers, who report to their parent
components and the NSPS PEO. These program managers also serve as their
components' NSPS action officers and participate in the development,
planning, implementation, and deployment of NSPS. Figure 1 shows the
organization of the NSPS design and implementation team.
Figure 1: NSPS Design and Implementation Team Organization:
[See PDF for image]
This figure is an illustration of an organizational chart, as follows:
(direct reporting authority unless otherwise indicated)
Senior Executive:
- Overarching Integrated Product Team (indirect reporting authority);
* Program Executive Officer (PEO);
- Chief of Staff;
- Deputy PEO;
- Senior Advisory Group (indirect reporting authority);
- Army Program Management Office (indirect reporting authority);
- Air Force Program Management Office (indirect reporting authority);
- Department of the Navy Program Management Office[A] (indirect
reporting authority);
- Washington Headquarters Service Program Management Office[B]
(indirect reporting authority);
- Training;
- Implementation and deployment;
- Program Evaluation;
- Human Resources Information Systems;
- Legislative and public affairs;
- Legal;
- Budget and financial management.
* Director, Human Resources Systems;
- Deputy;
* Director, Labor Relations and Appeals;
- Deputy.
Source: DOD.
[A] Includes the U.S. Navy and the U.S. Marine Corps.
[B] The Washington Headquarters Services is a field activity that
reports to the Director of Administration and Management, which has
oversight responsibility for DOD's "Fourth Estate" entities. The
"Fourth Estate" encompasses those organizational entities in DOD that
are not in the military departments or the combatant commands. These
include the Office of the Secretary of Defense, the Joint Staff, the
Office of the Inspector General of DOD, the defense agencies, and DOD
field activities.
[End of figure]
Table 1 shows DOD has phased (or spiraled) in over 182,000 civilian
employees into NSPS as of May 2008.[Footnote 12] Subsequently, the
National Defense Authorization Act for Fiscal Year 2008 prohibited the
Secretary of Defense from converting more than 100,000 employees to
NSPS in any calendar year. In response to this and other legislative
changes that resulted in revising NSPS regulations, the PEO has not
developed a new timeline for phasing in the remaining approximately
273,000 employees.[Footnote 13]
Table 1: Number of DOD Civilian Employees Phased into NSPS, as of May
2008:
Spiral: 1.1;
Number of employees: 11,391.
Spiral: 1.2;
Number of employees: 67,586.
Spiral: 1.3;
Number of employees: 35,147.
Spiral: 2.1;
Number of employees: 17,305.
Spiral: 2.2;
Number of employees: 50,438.
Spiral: Employees not associated with a particular spiral;
Number of employees: 763.
Spiral: Total number of employees;
Number of employees: 182,630.
Source: GAO analysis of DOD data.
Note: Employees not associated with a particular spiral--or conversion
group--are employees who are currently under NSPS, but whose positions
were not coded to show the spiral.
[End of table]
The performance management process of NSPS is ongoing and consists of
several phases that are repeated in each annual performance cycle, as
shown in figure 2. The planning phase that starts the cycle involves
supervisors (or rating officials) and employees working together to
establish performance plans. This includes (1) developing job
objectives--the critical work employees perform that is aligned with
their organizational goals and focused on results--and (2) identifying
contributing factors--the attributes and behaviors that identify how
the critical work established in the job objectives is going to be
accomplished (e.g., cooperation and teamwork). After the planning phase
comes the monitoring and developing phase, during which ongoing
communication between supervisors and employees occurs to ensure that
work is accomplished; attention is given to areas that need to be
addressed; and managers, supervisors, and employees have a continued
and shared understanding of expectations and results. In the rating
phase, the supervisor prepares a written assessment that captures the
employee's accomplishments during the appraisal period. In the final--
or reward--phase, employees should be appropriately rewarded or
compensated for their performance with performance payouts. During this
phase, employee assessments are reviewed by multiple parties to
determine employees' ratings and, ultimately, performance payouts.
Figure 2: Phases of NSPS Performance Management Process:
[See PDF for image]
This figure illustrates a repeating loop of the phases of NSPS
Performance Management Process, as follows:
Plan;
Monitor;
Develop;
Rate;
Reward;
repeat the loop.
Source: GAO rendering of DOD data.
[End of figure]
The performance management process under NSPS is organized by pay
pools. A pay pool is a group of employees who share in the distribution
of a common pay-for-performance fund.[Footnote 14] The key parties that
make up pay pools are the employee, supervisor, higher-level rating
authority, pay pool panel, pay pool manager, performance review
authority, and, in some instances, the sub-pay pool[Footnote 15] as
shown in figure 3.
Figure 3: Example of NSPS Pay Pool Organization:
[See PDF for image]
This figure is an illustration of the NSPS Pay Pool Organization, as
follows:
Performance review authority (PRA);
Pay Pool Manager;
* Pay Pool panel member;
- Rating official; employees;
- Rating official; employees;
* Pay Pool panel member (sub-pay pool manager);
- Rating official (sub-pay pool panel member); employees;
- Rating official (sub-pay pool panel member); employees;
- Rating official (sub-pay pool panel member); employees.
Source: DOD.
[End of figure]
Each of these groups has defined responsibilities under the performance
management process. For example, employees are encouraged to be
involved throughout the performance management cycle, including:
initially working with their supervisors to develop job objectives and
identify associated contributing factors; identifying and recording
accomplishments and results throughout the appraisal period; and
participating in interim reviews and end-of-year assessments, for
example by preparing self-assessments. Supervisors (or rating
officials) are responsible for effectively managing the performance of
their employees. This includes:
* clearly communicating performance expectations;
* aligning performance expectations and employee development with
organization mission and goals;
* working with employees to develop written job objectives reflective
of expected accomplishments and contributions for the appraisal period
and identifying applicable contributing factors;
* providing employees meaningful, constructive, and candid feedback
relative to performance expectations, including at least one documented
interim review;
* making meaningful distinctions among employees based on performance
and contribution; and:
* providing recommended ratings of record, share assignments, and
payout distributions to the pay pool.
The higher level reviewer, typically the rating official's supervisor,
is responsible for reviewing and approving job objectives and
recommended employee assessments. The higher level reviewer is the
first step in assuring consistency of ratings, because this individual
looks across multiple ratings. The next level of review is with the pay
pool panel or, in some cases, the sub-pay pool panel. The pay pool
panel is a board of management officials who are usually in positions
of line authority or in senior staff positions with resource oversight
for the organizations, groups, or categories of employees comprising
the pay pool membership.[Footnote 16] The primary function of the pay
pool panel is the reconciliation of ratings of record, share
distribution, and payout allocation decisions. Each pay pool has a
manager who is responsible for providing oversight of the pay pool
panel. The pay pool manager is the final approving official of the
rating of record. Performance payout determinations may be subject to
higher management review by the performance review authority[Footnote
17] or equivalent review process. The performance review authority
provides oversight of several pay pools, and addresses the consistency
of performance management policies within a component, major command,
field activity, or other organization as determined by the component.
DOD Has Taken Steps to Implement Internal Safeguards to Ensure Fairness
of NSPS; However, Implementation of Some Safeguards Could Be Improved:
Although DOD has taken some steps to implement internal safeguards to
ensure that the NSPS performance management system is fair, effective,
and credible, implementation of some safeguards could be improved.
Specifically, DOD has taken some steps to implement the safeguards
identified in the National Defense Authorization Act for Fiscal Year
2008 as well as safeguards GAO previously identified. These safeguards
include: (1) involving employees in the design and implementation of
the system; (2) linking employee objectives and the agency's strategic
goals and mission; (3) training and retraining employees and
supervisors in the system's operation; (4) requiring ongoing
performance feedback between supervisors and employees; (5) providing a
system to better link individual pay to performance in an equitable
manner; (6) allocating agency resources for the design, implementation,
and administration of the system; (7) including predecisional internal
safeguards to determine whether rating results are consistent,
equitable, and nondiscriminatory; (8) providing reasonable transparency
of the system and its operation; and (9) assuring meaningful
distinctions in individual employee performance. GAO has previously
reported that agencies should continually perform management controls,
such as monitoring of programs.[Footnote 18] We further reported that
agencies can conduct this ongoing monitoring internally or through
separate evaluations that are performed by the agency Inspector General
or an external auditor, such as GAO. While we believe continued
monitoring of all of these safeguards is needed to ensure that DOD's
actions are effective as implementation proceeds and more employees
become covered by NSPS, we determined that DOD's implementation of
three safeguards--predecisional internal safeguards, reasonable
transparency, and meaningful distinctions--could be improved
immediately. Until DOD effectively implements these safeguards,
employees will not have assurance that the system is fair, equitable,
and credible, which ultimately could undermine employees' confidence
and result in failure of the system.
Involve Employees in the Design and Implementation of the System:
DOD has taken several steps to involve employees and their stakeholders
in the design and implementation of NSPS. For example, DOD solicited
comments from employees and unions representing DOD employees during
the design of NSPS. Specifically, PEO officials said the department
received over 58,000 comments from people in response to the proposed
rules published in the Federal Register during the design phase.
[Footnote 19] These PEO officials further stated that unions were
appropriately engaged in the process and were afforded the opportunity
to comment on NSPS through the formal "meet and confer" process with
the union coalition.[Footnote 20] However, according to union
representatives we spoke with, DOD did not appropriately involve the
unions in the design of NSPS. Moreover, in 2005, unions representing
DOD employees filed a lawsuit against DOD claiming, among other things,
that DOD blocked the unions from meaningful participation in developing
NSPS regulations. However, the U.S. District Court for the District of
Columbia ruled in favor of DOD, finding that it satisfied its statutory
obligation to collaborate with the unions.[Footnote 21]
Initially, according to PEO officials, DOD involved some civilian
employees in the preliminary design stages of NSPS. For example, in
2004, PEO sponsored about 100 focus groups throughout DOD, including
overseas locations.[Footnote 22] Through these focus groups, PEO
received comments, ideas, and suggestions, which were summarized and
used in various design elements of NSPS. During 2004, DOD also
conducted town hall meetings both domestically and overseas to provide
employees with information about the status of the design and
development of NSPS, communicate with the workforce, and solicit
additional thoughts and ideas. Some of these town hall meetings were
broadcast live and videotapes of some of these meetings were later
rebroadcast on military television channels and websites. The
performance management system in DOD's original implementing issuance
was based on employees being rated on standard performance factors such
as cooperation and teamwork. However, according to a PEO official, DOD
received comments from management officials, individual employees, and
unions representing DOD employees opposing this approach. As a result,
DOD changed the performance management system. At the time of our
review, supervisors rated employees on specific job objectives that
were either written for the individual employee by the rating official
and employee or were standard for an organization, e.g., the Army's
standard supervisory objective. In addition, the original performance
factors became contributing factors that are identified as essential to
completing the job objective.
Furthermore, as part of the system design in 2005, DOD awarded a
contract to develop a performance factor model and associated benchmark
descriptors to use in NSPS. The contractors conducted workshops with a
sample of 95 "experienced" employees from three occupation categories-
-professional/analytic, supervisory/managerial, and technician/
support. During these workshops, the participants reviewed and revised
the performance factors and work behaviors to ensure their relevance,
accuracy, and applicability across jobs and organizational components,
so that the factors and work behaviors could serve as a basis for
clearly communicating performance expectations. Following the
workshops, the contractor administered Web-based questionnaires to all
DOD employees who would be covered by NSPS. These questionnaires asked
employees to rate the importance of each work behavior statement
defining a performance factor in terms of its importance for performing
their jobs. Valid survey responses were received from approximately 14
percent--or 71,000 employees. The responses from this survey were then
used to refine the performance factors, all but one of which were, at
the time of this review, functioning as the contributing factors and
were used to augment employees' ratings. These performance factors--or
contributing factors--are: communication, cooperation and teamwork,
critical thinking, customer focus, leadership, resource management, and
technical proficiency.[Footnote 23] Employees on the supervisory/
managerial pay schedule have an additional contributing factor--
supervision.
The employees and management officials we met with at the installations
we visited generally were not involved in either the design or
implementation of NSPS at the DOD level; however, we generally found
that employees served a contributory role in implementing NSPS at their
respective installations and commands. For example, employees at
several bases were involved in developing lessons learned following the
end of each performance management cycle. Their input was sought
through a variety of methods, including e-mail, group discussions, and
surveys. During implementation of the system at the DOD level, we
generally found that some employees were involved in assessments of the
process after the performance cycle. For example, the PEO conducted
focus groups with select employees across all of the components. In
addition, PEO engaged management from across the components in lessons
learned sessions.
Link Employee Objectives to the Agency's Strategic Goals and Mission:
DOD has made efforts to link employees' objectives to the agency's
strategic goals, mission, and desired outcomes. The DOD-wide tool for
employee self-assessments and appraisals--the Performance Appraisal
Application (PAA)--provides a designated area for the employee's
command's mission to be inserted as a guide while employees compose
their job objectives and self-assessments. Many NSPS management
officials, pay pool panel members, and supervisors we spoke with said
that the incorporation of the overall goals in the PAA was a first step
in facilitating employees' ability to link their objectives to the
agency's goals and missions. In addition, management officials at the
sites we visited told us that they verbally communicated to employees
how their specific roles facilitate the overall mission during group
discussions or other venues. Management officials at some installations
stated that they also encouraged first-line supervisors to have
conversations about this relationship with their employees.
Furthermore, one installation we visited provided employees with a
briefing slide that visually explained how employees at that activity
fit into the overall component's mission and desired outcomes (see app.
II).
Training and Retraining in the System's Implementation and Operation:
DOD encouraged employees who were transitioning to NSPS to receive a 10-
hour training course that covered skills and behaviors necessary to
implement and sustain NSPS, foster support and confidence in the
system, and facilitate the transition to a performance-based, results-
oriented culture. Program officials from all components told us that
they required employees who were transitioning to NSPS to take training
on NSPS. Specifically, this included all employees among the military
services, and at least 80 percent of employees among defense agencies
and activities under the fourth estate. Further, we found that the 12
sites we visited provided DOD's introductory training on NSPS to all
employees, as well as an additional introductory course for
supervisors. DOD also offered specialized training for functional areas
covered by the NSPS regulations, such as for supervisors/managers.
These specialized training courses cover pay banding, staffing
flexibilities, and performance management, among other topics. The core
functional training includes 18 hours of basic training and 24 hours of
pay pool panel training for managers and supervisors, 10 hours for
employees, and 26 or more hours for human resource practitioners.
Further, courses aimed at managers and supervisors focus heavily on the
performance management aspect of NSPS, and address goal-setting,
communicating with employees, and linking individual expectations to
the goals and objectives of the organization. DOD also focused on
change management training to address the behavioral aspects of moving
to NSPS and to better prepare the workforce for the changes that will
result from the new system's implementation. Training on NSPS was
provided via printed materials such as brochures or pamphlets, Web-
based training, and classroom instructor-led training.
In addition, some of the installations we visited supplied or had plans
to incorporate supplemental training on subjects such as writing self
assessments. Moreover, component program officials told us that the
components have plans for sustainment training, which is largely the
responsibility of the individual components. For example, the Army has
incorporated NSPS training into its course for newly promoted
supervisors. The Navy is developing just-in-time vignettes and
additional training on "soft skills," such as feedback, which will be
available for both supervisors and employees. Further, DOD had a number
of online training options for employees and supervisors.
Ongoing Performance Feedback and Dialogue between Supervisors and
Employees:
DOD's implementing issuances require supervisors to provide regular and
timely performance feedback that is meaningful, constructive, and
candid, including at least one documented interim review and an annual
performance appraisal during each performance appraisal period. At 10
of the sites we visited, supervisors told us that they communicated
performance ratings and feedback to employees in person, as encouraged
by DOD. Furthermore, DOD's online system--PAA--allowed supervisors and
employees to document interim, final, and any other formal feedback
sessions.
System to Better Link Individual Pay to Performance in an Equitable
Manner:
The structure of NSPS, as it was designed, is intended to allow linkage
between individual pay and performance in an equitable manner. For
example, NSPS has a multirating system that allows distinctions to be
made in employee performance, and therefore compensation. For instance,
within the five rating categories, employees may receive various
numbers of shares according to their rating of record. Since the number
of shares awarded determines the employee's overall payout, awarding
various numbers of shares permits further granularity--or distinctions-
-in linking employees' performance and pay. Moreover, several of the
pay pool panel members we spoke with told us they used discretion in
assigning higher ratings to ensure that the share value remained
significant, and therefore facilitated greater pay increases for those
employees awarded more shares--or higher ratings.
Means to Ensure that Adequate Agency Resources Are Allocated for System
Design, Implementation, and Administration:
DOD has taken steps to ensure that agency resources are allocated for
the system's design, implementation, and administration, including
steps to address--but not fully implement--resource allocation actions
we previously recommended that could benefit the long-term
implementation of NSPS. As an example, NSPS law[Footnote 24] provides
that, to the maximum extent practicable, for fiscal years 2004 through
2012 the aggregate amount of money allocated for civilian compensation
for organizations under NSPS may not be less than the amount that would
have been allocated under the General Schedule system.[Footnote 25] DOD
has taken some actions to ensure that organizations under NSPS receive
no less money for performance payments in the pay-banded NSPS than they
would have for associated compensation and performance awards under the
General Schedule system. For example, according to a PEO official, the
department determined the percentage that components must use as their
minimum, aggregated pay pool percentage for performance-based salary
increases.[Footnote 26]
Further, the department has taken steps to address actions we have
previously recommended. In July 2007, we found that DOD's November 2005
cost estimate of $158 million to implement NSPS between fiscal years
2005 and 2008 did not include the full cost that DOD expected to incur
as a result of implementing the new system.[Footnote 27] Further, we
reported that the total amount of funds DOD had expended or obligated
to design and implement NSPS during fiscal years 2005 through 2006
could not be determined because DOD had not established an oversight
mechanism to ensure that these costs would be fully captured. As a
result, we recommended that DOD define all costs needed to manage NSPS,
prepare a revised estimate of those system implementation costs in
accordance with federal financial accounting standards, and develop a
comprehensive oversight framework to ensure that all funds expended or
obligated to design and implement NSPS would be fully captured and
reported. DOD generally concurred with our recommendations. To address
our recommendations, PEO reconvened the DOD-wide NSPS Financial
Integrated Product Team in 2007, which recommended, as we did, that the
department expand the cost category definitions and clarify the
treatment of direct and indirect costs. PEO advised the components of
these new definitions and the resulting requirements in September 2007.
PEO also provided a revised estimate for implementation costs in the
proposed NSPS regulations, published in the Federal Register on May 22,
2008.[Footnote 28] Specifically, DOD estimated the overall costs
associated with continuing to implement NSPS will be approximately $143
million from fiscal years 2009 through 2011.
To address our recommendation on oversight of reported costs, PEO
reports that each component took actions. Specifically, the Army
established new account processing codes for NSPS that comply with NSPS
reporting categories and identified a central NSPS budget point of
contact. Further, the Assistant Secretary of the Army (Financial
Management and Comptroller) is providing an independent review to
determine whether the Army major commands are meeting established
internal procedures for tracking, capturing, and reporting NSPS
implementation costs in specific categories. The Navy required all
major commands to provide screen shots and/or proof that quarterly
implementation costs are recorded in the appropriate accounting system.
In addition, the Fourth Estate established unique identifiers for such
cost transactions in its organization's financial management and
accounting systems, including the Defense Travel System. The Fourth
Estate entities are required to verify cost data through trial balances
and reconciliations with the Defense Finance Accounting Services'
reports and monthly billing reports and each of the entities'
comptrollers and/or resource management directorate reviews these
latter reports. Lastly, at the time of our review, according to PEO,
all Air Force NSPS activity was classified as "sustainment" and those
costs were accounted for within the service's existing financial
oversight framework, which includes its cost accounting systems. The
Air Force has completed deploying NSPS and has no further
implementation costs to report; however, future implementation costs
may accrue, if additional employees are later converted to NSPS.
Predecisional Internal Safeguards to Determine if Rating Results Are
Consistent, Equitable, and Nondiscriminatory:
DOD has taken some steps to ensure that predecisional internal
safeguards are employed; however, the department is unable to
determine, prior to the finalization of ratings, whether rating results
under NSPS are consistent, equitable, and nondiscriminatory.
Specifically, NSPS is designed with multiple layers of review before an
employee's appraisal is finalized. For example, a supervisor writes the
employee's performance assessment and recommends a rating which is then
submitted for review to a higher level reviewer, who often serves as an
interim level of review prior to the rating's reaching the pay pool
panel for its review. Additionally, at 10 of the 12 installations we
visited, sub-pay pools had been established, often based on
organizational structure to review a group of or all appraisals. The
pay and sub-pay pool panels would either review all of the employee
appraisals and self-assessments or they would review a sample of these
documents. For example, the pay pool may review all appraisals assessed
at the 1, 2, 4, and 5 ratings and randomly select a sample of the
appraisals assessed at the 3 level. According to some pay pool panel
members, panels reviewed employee appraisals separately, by job focus,
such as engineers, to allow for a more consistent measure of employee
performance. The panels also made efforts to determine the consistency
among rating officials, which, according to the panel members, helps to
eliminate bias, discrimination, or politicization.
Although these efforts are laudable, DOD is unable to determine whether
rating results under the system are consistent, equitable, or
nondiscriminatory prior to the ratings' certification because it does
not require any predecisional analysis of the ratings. In fact, only
one quarter of the installations we visited analyzed the predecisional
results of the rating distribution according to demographics, although
doing so could expose possible trends, anomalies, or biases within the
rating process. DOD does not require the components, or any levels
within the department, to have a third party analyze the predecisional
demographic results for trends or anomalies in the data. Furthermore,
DOD does not provide the individual installations or commands with a
means for assessing their rating distributions by demographics.
Instead, DOD deliberately designed the computer application used by the
pay pool panels to exclude demographic data. Therefore, any
installation that performed demographic analysis, including those we
visited, had to take additional steps to gather and correlate the
necessary data to perform the analysis. DOD officials told us they did
not require any predecisional analysis of rating data and did not
include demographic data in the computer application because they did
not want to introduce the potential for management to be influenced by
bias or discrimination by adjusting the ratings so they could fit a
certain predetermined or expected distribution by demographics. DOD
officials were also concerned that employees might think that their
ratings had been influenced by the demographic data for the same
reasons. Furthermore, PEO officials stated that the analysis of pay
pools' final rating results by demographics was sufficient to identify
anomalies or trends associated with equity and nondiscrimination.
However, the purpose of analyzing predecisional rating results is to
identify any potential egregious decisions or investigate any potential
problems, such as blatant discrimination, in a transparent manner
before finalizing the ratings. The purpose of this predecisional
analysis is not, however, to change the results to portray an "ideal"
distribution, or to alter the outcome of the performance management
process. Moreover, this type of analysis is not intended to change the
rating results unless a mistake was identified. Identifying an anomaly
in the data prior to finalizing the rating decisions would enable
management to investigate the situation and determine whether the
results accurately reflect the employees' performance or an outside
factor is affecting the results. Furthermore, our prior work has
highlighted other agencies that have implemented predecisional analysis
as part of performance management systems.[Footnote 29] Until DOD
conducts a predecisional analysis of the rating results to identify
possible trends or anomalies, employees may lack confidence in the
fairness and credibility of the system.
Reasonable Transparency of the System and Its Operation:
Although DOD has taken steps to ensure a reasonable amount of
transparency during the implementation of NSPS, DOD's performance
management system does not provide employees with transparency over the
final rating results. For example, DOD has taken actions to provide
reasonable transparency by reporting periodically on internal
assessments and employee survey results relating to performance
management. Specifically, DOD has an "evaluation plan" that calls for
it to conduct yearly employee focus groups following the close of the
performance management cycle. The department distributed the results of
its 2004 focus groups concerning the design of NSPS and its performance
management system to the union coalition representing DOD employees and
according to officials it plans to brief employee representatives on
the results of its 2008 focus groups and other findings from its
evaluation of NSPS in spiral One. DOD's assessment of NSPS also
includes its collaboration with the Defense Manpower and Data Center to
sample and report on the NSPS workforce, and to include specific
questions of interest for evaluating NSPS, in its now-yearly survey of
DOD civilian employees. The survey results are available on the Defense
Manpower and Data Center's Web site, and provided to key management
officials in a briefing. Further, DOD's NSPS office facilitates lessons-
learned briefings with all four components at the conclusion of each
cycle.
Despite these efforts, DOD's performance management system does not
provide adequate transparency over its rating results to employees
because it does not require commands or pay pools to publish their
respective rating and share distributions to employees. Although DOD
suggests that distributing aggregate data to employees is an effective
means for providing transparency, the department does not require
commands or pay pools to publish the rating distributions.[Footnote 30]
Moreover, NSPS program officials at all four components told us that
publishing overall results is considered a best practice. However,
three of the installations we visited did not publish the overall
rating and share distribution at any level for various reasons or, as
officials at one installation told us, for no particular reason at all.
Without transparency over rating and share distributions, employees may
believe they are not being rated fairly, which ultimately can undermine
their confidence in the system.
Meaningful Distinctions in Individual Employee Performance:
The NSPS performance management system is designed to allow for
meaningful distinctions to be made in employee performance. However,
NSPS is not being implemented in a way that encourages use of all
available rating categories, thus limiting the system's ability to
ensure that meaningful distinctions in employee performance, and
therefore pay, are made. The performance management system for NSPS
consists of five rating categories, of which the lowest rating is a "1"
(unacceptable performance) and the highest rating is a "5" (role model
performance). Further, the number of shares employees receive is
commonly based on the employees' "raw performance scores," and the
shares ultimately determine employees' overall payout.[Footnote 31] For
example, at the installations we visited, the level "3" rating (valued
performer) typically was awarded one or two shares depending on the
employee's raw performance scores. The overall number of shares awarded
within a pay pool determines the value of the share. This means that
the budget does not dictate the ratings because the value of a share
depends on how many shares in total are being awarded. Regardless of
the value of the share, an employee who receives a "3" rating with two
shares would receive twice the payout percentage of an employee who
received a "3" rating with one share within the same pay pool.
Although DOD has established mechanisms within NSPS to allow for
meaningful distinctions to be made, the guidance provided by the
leadership at the PEO and component levels may discourage rating
officials from using all available rating categories. Specifically, it
was verbally expressed during training at multiple levels that the
majority of employees should expect to be rated at the "3" level (or
valued performer), according to PEO and component officials with whom
we spoke. Furthermore, at 10 of the 12 installations we visited, rating
officials, panel members, program management, and/or employees told us
they were instructed by management, through training, or informed via
verbal guidance, to expect that most employees would be evaluated as
valued performers. The four components' representatives noted that they
received this guidance from PEO, along with the NSPS performance
indicators and benchmarks, and disseminated it downward via verbal
guidance, often through training. Moreover, PEO officials confirmed
that NSPS program management across the components was to communicate
downward, through training, that the majority of employees were likely
to be rated at the "3" level. In addition, one pay pool panel we
visited specified in its business rules that most employees should
expect to receive a "3" rating. As a result of this communication,
there was a hesitancy to award employee ratings in other categories,
across the sites visited. Some pay pool panel members and rating
officials with whom we spoke noted that they were reluctant to award
too many 4s and 5s. In addition, several rating officials told us that
there is a hesitancy to assign lower ratings--specifically a "2" or
"1"--due to the additional paperwork and justification required of the
supervisor, and the potential for employee backlash. Moreover, during
our group discussions with civilian employees, a prevalent theme was
that it was impossible to receive a rating higher or lower than a "3."
As a result of the explicit guidance that most employees should be
rated as a "3" and the reaction of the pay pool panels, supervisors,
and employees we met with, it is questionable whether meaningful
distinctions are being made in NSPS employees' performance ratings.
The verbal guidance that was incorporated in training and town hall
meetings with employees--i.e., that most employees should expect to be
rated at the "3" level--was intended to prepare employees not to have
high expectations of what their ratings would be under NSPS, according
to PEO officials. Further, officials within PEO and the components, as
well as pay pool panel members and supervisors told us that the prior
rating system was inflated and many employees were accustomed to
receiving the highest available rating. In other cases, employees were
transitioning from a system that either rated the employee as passing
or failing. As a result, PEO officials were concerned that the more
stringent performance indicators under NSPS needed to be fully
communicated to employees. Furthermore, PEO, and most of the
installations we visited, emphasized that there was not a forced
distribution of ratings. Specifically, PEO guidance prohibits forced
rating distributions or quotas, and we have previously reported that
making meaningful distinctions in employee performance, such as
agencies not imposing a forced distribution of performance ratings--
i.e., a fixed numeric or percentage limitations on any rating levels--
is a key practice in effectively implementing performance management
systems.[Footnote 32] Further, according to NSPS implementing issuance,
rating results should be based on how well employees complete their job
objectives using the performance indicators. We collected and analyzed
the rating results from the pay pools we visited, as well as DOD-wide
(see table 2). The pay pool rating distributions we reviewed from our
12 site visits revealed that 60 percent or more of employees were rated
at the "3" level at 9 pay pools. However, we were unable to determine
whether these final distributions were meaningful because we do not
have specific knowledge of employees' performance within these pay
pools. For example, within one pay pool it is feasible that the vast
majority of employees are performing at the "3" level based on the
performance indicators and employees' performance. It is also possible
that at a different pay pool a vast majority are performing at the "4"
level.
Table 2: Percentage of Employees in Each Rating Category by DOD and Pay
Pools Visited:
DOD:
Rating category: 1: 0.2%;
Rating category: 2: 1.6%;
Rating category: 3: 57.0%;
Rating category: 4: 36.1%;
Rating category: 5: 5.1%.
DOD: Redstone Arsenal;
Rating category: 1: 0.3;
Rating category: 2: 1.0;
Rating category: 3: 66.0;
Rating category: 4: 31.0;
Rating category: 5: 2.0.
DOD: Fort Huachuca;
Rating category: 1: 0;
Rating category: 2: 2.0;
Rating category: 3: 63.0;
Rating category: 4: 31.0;
Rating category: 5: 4.0.
DOD: Fort Sam Houston;
Rating category: 1: 0;
Rating category: 2: 1.0;
Rating category: 3: 60.0;
Rating category: 4: 38.0;
Rating category: 5: 1.0.
DOD: Tinker Air Force Base;
Rating category: 1: 0.1;
Rating category: 2: 4.0;
Rating category: 3: 68.0;
Rating category: 4: 26.0;
Rating category: 5: 2.0.
DOD: Randolph Air Force Base[A];
Rating category: 1: 0;
Rating category: 2: 1.0;
Rating category: 3: 34.0;
Rating category: 4: 43.0;
Rating category: 5: 21.0.
DOD: March Air Reserve Base;
Rating category: 1: 0;
Rating category: 2: 1.0;
Rating category: 3: 69.0;
Rating category: 4: 25.0;
Rating category: 5: 4.0.
DOD: Joint Warfare Analysis Center;
Rating category: 1: 0.4;
Rating category: 2: 1.0;
Rating category: 3: 73.0;
Rating category: 4: 24.0;
Rating category: 5: 2.0.
DOD: Naval Facilities Headquarters;
Rating category: 1: 0;
Rating category: 2: 1.0;
Rating category: 3: 50.0;
Rating category: 4: 40.0;
Rating category: 5: 9.0.
DOD: Marine Corps Tactical Systems Support Activity;
Rating category: 1: 0;
Rating category: 2: 2.0;
Rating category: 3: 84.0;
Rating category: 4: 14.0;
Rating category: 5: 0.
DOD: DOD, Office of Inspector General;
Rating category: 1: 0;
Rating category: 2: 2.0;
Rating category: 3: 53.0;
Rating category: 4: 38.0;
Rating category: 5: 6.0.
DOD: Defense Microelectronics Activity;
Rating category: 1: 0;
Rating category: 2: 3.0;
Rating category: 3: 60.0;
Rating category: 4: 27.0;
Rating category: 5: 10.0.
DOD: Defense Threat Reduction Agency;
Rating category: 1: 0.2;
Rating category: 2: 2.0;
Rating category: 3: 65.0;
Rating category: 4: 31.0;
Rating category: 5: 2.0.
Source: GAO analysis of DOD data.
Note: The percentages presented in this table may not total to 100 due
to rounding.
[A] Officials we interviewed from one of the pay pools at Randolph Air
Base told us that they were aware that their pay pool rating
distribution had more employees rated in category 4 and 5 than many
other pay pools and the norm in DOD; however, they said they believed
their ratings accurately reflected their employees' performance.
Furthermore, these officials told us that most of the employees who
were under NSPS in their pay pool were supervisors and "high
performing" employees.
[End of table]
Unless NSPS is implemented in a manner that encourages meaningful
distinctions in employee ratings in accordance with employees'
performance, employees will continue to believe they are not rated
fairly and that there is an unspoken forced distribution of ratings,
and their confidence in the system will continue to be undermined.
Although DOD Civilian Employees under NSPS Identified Some Positive
Aspects of the System, DOD Does Not Have a Plan for Addressing the
Generally Negative Employee Perceptions of NSPS:
While DOD employees under NSPS are positive regarding some aspects of
NSPS's performance management system, they generally expressed negative
perceptions of the system in both DOD's survey and the focus group
sessions we held, and DOD does not have a plan to address these
negative employee perceptions. Specifically, while DOD's SOFS of
civilian employees indicates that attitudes on certain aspects of
performance management are more positive among employees who have
transitioned to NSPS compared to all other DOD employees, the most
recent survey results indicate that attitudes of employees who have
been under NSPS the longest have become slightly more negative toward
other aspects of performance management. Moreover, civilian employees,
including supervisors, expressed concerns or negative attitudes about
NSPS during the focus group discussions we held at 12 select
installations. These attitudes are not surprising given that
organizational transformations often require an adjustment period to
gain employee acceptance and trust. However, DOD has not developed a
specific action plan for addressing the critical issues raised by
employees in both DOD's survey results of employees and the PEO's
evaluation of NSPS through focus groups.
NSPS Employee Attitudes on Certain Aspects of Performance Management
Are More Positive than All DOD Employees, but Have Slightly Declined
among Those Employees Who Have Been under NSPS the Longest:
DOD's survey of civilian employees indicates that attitudes on certain
aspects of performance management, such as pay raises depending on
performance, are more positive among employees who have transitioned to
NSPS compared to all other DOD employees. However, most recent survey
results indicate that attitudes of employees who have been under NSPS
the longest have become slightly more negative toward certain other
aspects of performance management, such as the overall impact of NSPS
on personnel practices at DOD. During our analysis of DOD's survey
results for November and May 2006 and May 2007, we noted that employee
responses to the questions we identified as related to NSPS and
performance management were fairly evenly distributed across the
"disagree," "agree," and "neither" responses. As a result, we do not
know what the overall trend is or whether this movement in the negative
direction will continue in future years. We will be able to identify
trends in employee attitudes after employees have had more time under
NSPS and additional surveys are administered.
Survey Results Indicate that Employees under NSPS Are More Positive
than Other DOD Employees about Some Aspects of Performance Management:
Our review of the results of the 2007 SOFS for DOD civilian employees
found that employees under NSPS are slightly more positive than all
other DOD employees about some aspects related to the goals of
performance management.[Footnote 33] Specifically, the Office of
Personnel Management reported that the goals of performance management
under NSPS are to link employee performance, pay, and mission
accomplishment as well as to make meaningful distinctions in employee
performance.[Footnote 34] For example, an estimated 56 percent of NSPS
employees indicated that they believed that bonus and cash awards are
based on performance compared to 52 percent of all DOD employees.
[Footnote 35] In addition, an estimated 40 percent of NSPS supervisors
responded that they agreed they could influence their employee's pay to
reflect performance as compared to 27 percent of all DOD supervisors.
See table 3 for additional examples. Furthermore, we identified some
instances in which spiral 1.1 employees, who were the first to
transition into NSPS, showed even more positive attitudes toward
performance management. For example, an estimated 25 percent of all DOD
employees agreed that pay raises depend on how well employees perform
their jobs, compared to 40 percent of all NSPS employees and 43 percent
of spiral 1.1 employees. See appendix III for additional survey
questions and responses related to performance management and NSPS.
Table 3: Estimated Percentage of Responses from Status of Forces Survey
for DOD Civilian Employees, May 2007:
Question: Performance management; Differences in performance are
recognized in a meaningful way;
Employee description: DOD;
Agree: 34%;
Neither: 32%;
Disagree: 30%.
Question: Performance management; Differences in performance are
recognized in a meaningful way;
Employee description: NSPS;
Agree: 38;
Neither: 31;
Disagree: 27.
Question: Performance management; Bonus and cash awards are based on
performance;
Employee description: DOD;
Agree: 52;
Neither: 20;
Disagree: 27.
Question: Performance management; Bonus and cash awards are based on
performance;
Employee description: NSPS;
Agree: 61;
Neither: 19;
Disagree: 20.
Question: Performance management; In my work unit, steps are taken to
deal with a poor performer who cannot or will not improve;
Employee description: DOD;
Agree: 29;
Neither: 30;
Disagree: 37.
Question: Performance management; In my work unit, steps are taken to
deal with a poor performer who cannot or will not improve;
Employee description: NSPS;
Agree: 34;
Neither: 31;
Disagree: 30.
Question: Performance management; Pay raises depend on how well
employees perform their jobs;
Employee description: DOD;
Agree: 25;
Neither: 28;
Disagree: 43.
Question: Performance management; Pay raises depend on how well
employees perform their jobs;
Employee description: NSPS;
Agree: 40;
Neither: 28;
Disagree: 28.
Question: Personnel actions; I can influence my employees' pay to
reflect performance;
Employee description: DOD;
Agree: 27;
Neither: 31;
Disagree: 43.
Question: Personnel actions; I can influence my employees' pay to
reflect performance;
Employee description: NSPS;
Agree: 40;
Neither: 28;
Disagree: 32.
Question: Leadership and management; Managers communicate their goals
and priorities;
Employee description: DOD;
Agree: 58;
Neither: 22;
Disagree: 20.
Question: Leadership and management; Managers communicate their goals
and priorities;
Employee description: NSPS;
Agree: 63;
Neither: 19;
Disagree: 17.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("agree") and negative
("disagree") responses. That is, "agree" is the estimated percentage of
employees who responded either "agree" or "strongly agree", while
"disagree" is the estimated percentage of employees who responded
either "disagree" or "strongly disagree."
[End of table]
Survey Results in Some Instances Show a Slight Decline in Employee
Attitudes among Those Employees Who Have Been under NSPS the Longest:
In some instances, DOD's survey results showed a decline in employee
attitudes among employees who have been under NSPS the longest.
Responses of spiral 1.1 employees, who were among the first employees
converted to NSPS, were steadily more negative about NSPS from the May
2006 to the May 2007 DOD survey. At the time of the May 2006
administration of the SOFS for civilians, employees designated as
spiral 1.1 had received training on the system and had begun the
conversion process, but had not yet gone through a rating cycle and
payout under the new system. As part of this training, employees were
exposed to the intent of the new system and the goals of performance
management and NSPS, which include annual rewards for high performance
and increased feedback on employee performance. However, as DOD and the
components proceeded with implementation of the system, survey results
showed a decrease in employees' optimism about the system's ability to
fulfill its intent and reward employees for performance. The changes in
attitude reflected in DOD's employee survey are slight, but indicate a
movement in employee perceptions. Most of the movement in responses was
negative. Specifically, in response to a question about the impact NSPS
will have on personnel practices at DOD, the number of positive
responses decreased from an estimated 40 percent of spiral 1.1
employees in May 2006 to an estimated 23 percent in May 2007.[Footnote
36] Further, when asked how NSPS compared to previous personnel
systems, an estimated 44 percent said it was worse in November 2006,
compared to an estimated 50 percent in May 2007.[Footnote 37]
Similarly, employee responses to questions about performance management
in general were also more negative from May 2006 to May 2007, as shown
in table 4. Specifically, the results of the May 2006 survey estimated
that about 67 percent of spiral 1.1 employees agreed that the
performance appraisal is a fair reflection of performance, compared to
52 percent in May 2007. Further, the number of spiral 1.1 employees who
agreed that the NSPS performance appraisal system improves
organizational performance decreased from an estimated 35 percent to 23
percent. For additional questions and results related to NSPS and
performance management, see appendix III.
Table 4: Estimated Percentage of Spiral 1.1 Employees' Responses for
Select Questions from the May 2007, November 2006, and May 2006
Administrations of the Status of Forces Survey for DOD Civilian
Employees:
Question: Performance management; Performance appraisal is fair
reflection of performance;
Survey administration: May 2006;
Agree: 67%;
Neither: 20%;
Disagree: 12%.
Question: Performance management; Performance appraisal is fair
reflection of performance;
Survey administration: November 2006;
Agree: 59;
Neither: 22;
Disagree: 16.
Question: Performance management; Performance appraisal is fair
reflection of performance;
Survey administration: May 2007;
Agree: 52;
Neither: 21;
Disagree: 25.
Question: Performance management; Performance standards/expectations
take into account important parts of job;
Survey administration: May 2006;
Agree: 68;
Neither: 20;
Disagree: 12.
Question: Performance management; Performance standards/expectations
take into account important parts of job;
Survey administration: November 2006;
Agree: 65;
Neither: 20;
Disagree: 16.
Question: Performance management; Performance standards/expectations
take into account important parts of job;
Survey administration: May 2007;
Agree: 59;
Neither: 20;
Disagree: 20.
Question: Performance management; Performance appraisal system improves
organizational performance;
Survey administration: May 2006;
Agree: 35;
Neither: 39;
Disagree: 26.
Question: Performance management; Performance appraisal system improves
organizational performance;
Survey administration: November 2006;
Agree: 30;
Neither: 37;
Disagree: 34.
Question: Performance management; Performance appraisal system improves
organizational performance;
Survey administration: May 2007;
Agree: 23;
Neither: 31;
Disagree: 47.
Question: Performance management; Current performance appraisal system
motivates me to perform well;
Survey administration: May 2006;
Agree: 43;
Neither: 33;
Disagree: 25.
Question: Performance management; Current performance appraisal system
motivates me to perform well;
Survey administration: November 2006;
Agree: 42;
Neither: 28;
Disagree: 30.
Question: Performance management; Current performance appraisal system
motivates me to perform well;
Survey administration: May 2007;
Agree: 38;
Neither: 26;
Disagree: 36.
Question: NSPS; NSPS has improved personnel process for communication
between supervisors and employees;
Survey administration: May 2006;
Agree: N/A;
Neither: N/A;
Disagree: N/A.
Question: NSPS; NSPS has improved personnel process for communication
between supervisors and employees;
Survey administration: November 2006;
Agree: 38;
Neither: 36;
Disagree: 38.
Question: NSPS; NSPS has improved personnel process for communication
between supervisors and employees;
Survey administration: May 2007;
Agree: 34;
Neither: 31;
Disagree: 34.
Question: NSPS; NSPS has improved personnel process for linking pay to
performance;
Survey administration: May 2006;
Agree: N/A;
Neither: N/A;
Disagree: N/A.
Question: NSPS; NSPS has improved personnel process for linking pay to
performance;
Survey administration: November 2006;
Agree: 29;
Neither: 38;
Disagree: 33.
Question: NSPS; NSPS has improved personnel process for linking pay to
performance;
Survey administration: May 2007;
Agree: 28;
Neither: 26;
Disagree: 46.
Question: NSPS; NSPS has improved personnel processes for individual
performance supporting organizational mission;
Survey administration: May 2006;
Agree: N/A;
Neither: N/A;
Disagree: N/A.
Question: NSPS; NSPS has improved personnel processes for individual
performance supporting organizational mission;
Survey administration: November 2006;
Agree: 35;
Neither: 39;
Disagree: 35.
Question: NSPS; NSPS has improved personnel processes for individual
performance supporting organizational mission;
Survey administration: May 2007;
Agree: 33;
Neither: 36;
Disagree: 33.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval with a margin of error for the May 2007 results within +/-2
percent and within +/-3 percent for the May 2006 and November 2006
results. The response categories are collapsed for positive ("agree")
and negative ("disagree") responses. That is "agree" is the estimated
percentage of employees who responded either "agree" or "strongly
agree," while "disagree" is the estimated percentage of employees who
responded either "disagree" or "strongly disagree." In addition, some
responses for the May 2006 survey are "N/A" because those questions
were not asked on that survey.
[End of table]
DOD Employees in Our Discussion Groups Expressed Wide-Ranging but
Consistent Concerns about NSPS:
In the discussion groups we held, DOD employees and supervisors
expressed wide-ranging but consistent concerns about NSPS. While the
results of our discussion groups are not generalizable to the entire
population of DOD civilians, the themes that emerged from our
discussions provide valuable insight into civilian employees'
perceptions about the implementation of NSPS and augment DOD's survey
findings. During these discussion groups, we found that some civilian
employees were optimistic about the intent of the system and its
potential benefits, for example, rewarding high performers and
improving communication between supervisors and employees. Further,
some employees we met with told us that they were satisfied with NSPS
and had no complaints about the system. However, during all of our
discussion groups, civilian employees, including supervisors, expressed
concerns or negative attitudes about NSPS. Prevalent themes or employee
perceptions coming out of those discussion groups were that NSPS (1)
had a negative impact on motivation and morale, (2) required employees
and supervisors to spend excessive amounts of time navigating the
performance management process, (3) was biased due to the potential
influence that employees' and supervisors' writing skills have on
panels' assessments of employee ratings, (4) lacks transparency over
the pay pool panel process, and (5) was implemented at a rapid pace.
Employees also commented on other aspects of NSPS. (See app. IV for a
discussion of less prevalent themes that emerged from our discussion
groups.) Given that NSPS has just entered its third year of
implementation, these negative attitudes are not surprising. As stated
before, our previous work as well as the reports published by the
Office of Personnel Management have shown that organizational
transformations, such as the adoption of a new performance management
system, often entail fundamental and radical changes to an organization
that requires an adjustment period to gain employee acceptance and
trust.[Footnote 38] As a result, major change management initiatives in
large-scale organizations can often take several years to be fully
successful.
Negative Impact on Motivation and Morale:
A prevalent theme from our discussions with both employees and
supervisors was that several aspects of NSPS have had a negative impact
on employee motivation and morale. Specifically, employees and
supervisors at 9 of the 12 sites we visited expressed concern that
management had established an unpublished quota for rating
distributions and that a majority of employees were arbitrarily placed
in the "3" or "valued performer" category. As a result, some employees
said they are not motivated to perform above the "3" level, because
they think they will receive this rating regardless of their individual
performance. In addition, employees suspected that both their ratings
and their pay pool's overall rating distribution were predetermined
based on the pay pool's available funding. While some employees said
that giving too many "4" and "5" ratings would diminish share value,
other employees expressed concern that management's attempt to group
everyone in the "3" category did not result in the recognition of
different levels of performance. Another prevalent theme at 10 of the
sites we visited was that a rating of "3" was perceived as being
average, and not "valued," despite what they were told during training
and in other information they received about the system. As a result,
employees at 10 sites we visited stated that distinctions in different
levels of performance were not being made, while others stated that, by
not distinguishing between differing levels of employee performance,
NSPS has the potential to discourage employees from going above and
beyond in their performance over time.
Furthermore, employees at 8 of the 12 sites we visited questioned the
merit of a pay-for-performance system for civil service employees
because, for many, money is not a motivator. Employees at 2 locations
told us that they valued their reputation and recognition from their
supervisor when they did a good job more than they did the monetary
reward associated with their rating. As a result, some employees did
not agree with having their rating linked to the monetary award.
Employees at a couple of sites stated that they would prefer a higher
rating regardless of the payout. Employees at several locations told us
that they did not trust that the system was in the employees' best
interest, but rather was an attempt by the government to "save money at
the expense of the employees." Moreover, some employees believed that
they were not doing as well financially as their GS counterparts.
During discussion groups we heard that employees were comparing pay
increases they would have received under the GS system to those they
received under NSPS. Discussion group participants also told us that
DOD's transition to NSPS has been further complicated by the fact that
civilian employees were previously under a performance management
system where ratings were inflated for an extended period of time. For
example, a supervisor at one location we visited stated that employees
at that location were used to the previous performance management
system, under which a majority of the workforce received an inflated
rating.[Footnote 39] PEO heard similar concerns during a series of
focus groups that it conducted in 2004. Specifically, participating
employees reported that rating inflation existed in the prior system,
which resulted in the system's inability to distinguish between high
and low performers.
Excessive Amount of Time Spent Navigating the Performance Management
Process:
A prevalent theme at all 12 locations we visited was that it was
excessively time-consuming and/or labor intensive to navigate through
all the steps of the performance management process of NSPS. While some
participants recognized that a learning curve is to be expected with
any new system, other participants told us that NSPS requires a much
greater time commitment than previous performance management systems.
Employees, including supervisors, also told us that, in some cases they
found that the tasks and responsibilities associated with NSPS hindered
their ability to focus on and complete their assigned job duties.
Specifically, employees in both supervisory and nonsupervisory
positions told us that the back and forth exchange of draft job
objectives and self-assessments with their supervisor was particularly
time consuming. Participants in some of our discussion groups also told
us that they had to devote excessive amounts of time to tracking and
writing up their tasks over the course of the performance cycle. For
example, we heard at multiple sites that employees kept a daily log, or
record, of their tasks so that they would be able to write, in detail,
what they did on their self-assessments. Moreover, both supervisors and
employees expressed frustration that the entire process was too labor-
intensive, with some saying that management had to delay their day-to-
day work for extensive periods of time to complete ratings and
participate in the sub-pay pool and pay pool panel processes. Further,
supervisors in our discussion groups told us that their administrative
tasks under NSPS, specifically drafting ratings and maneuvering back
and forth with the employee through the steps in the computer
application, required so much of their time that they could barely
fulfill their other job responsibilities. During one discussion group,
supervisors told us that it took a minimum of 4 uninterrupted hours per
employee to complete a rating. Employees expressed a similar sentiment
in regards to their supervisors. For example, during a discussion group
with employees, we heard that one supervisor had to shut his door for
an extended period of time in order to complete employee assessments.
In addition, some employees told us that they did not see the added
benefit of the system, given the amount of time and effort they had to
invest in performing tasks such as drafting job objectives and self-
assessments while navigating the performance appraisal process.
Employees further noted that, despite the significant amount of time
they invested to complete the process, they received a "3" or felt
their payout was insufficient to justify the time investment. A couple
of supervisors told us that their subordinates have asked why they
should put in the effort if they are going to get a "3."
Potential Influence that Employees' and Supervisors' Writing Skills
Have on Panels' Assessments of Employee Ratings:
Supervisors and employees at 11 of the 12 locations we visited voiced
concern that their writing skills, as evidenced in their job
objectives, self-assessments, and ratings, influenced the panels'
evaluation of the ratings they received under NSPS and potentially
overshadowed the accomplishments they achieved during the rating
period. Specifically, during two discussion groups, employees in more
technical positions felt that they were at a disadvantage when it came
to writing objectives and self-assessments because their strengths lie
in other areas or their jobs do not require them to regularly produce
written products. Further, supervisors told us that they were concerned
that their own writing skills were detrimental to employee ratings. For
example, one supervisor told us that he bought a number of books on
writing and performance appraisals to assist him with the process so
that his employees would not be disadvantaged.
Some employees told us that they devoted a significant amount of time
to their self-assessments, often using personal time to compose them.
However, other employees told us that the quality of their assessment
and their rating may have suffered because they were focused on their
job responsibilities and did not invest a lot of time and effort in
their assessment. For example, during one discussion group, employees
said that since the end of the rating cycle coincides with the end of
the fiscal year, they must choose between meeting fiscal year deadlines
and completing their NSPS assessment tasks. Furthermore, some employees
and supervisors were unclear as to (1) what information they should
include in their self-assessments and/or employee ratings and (2) what
format they should use, because they had not received any examples,
feedback for improvement, or comments on the strengths of previous
assessments. Participants also noted that it is difficult to explain to
the pay pool panel exactly what each employee's job entails, regardless
of the amount of explanation they are allowed.
Employees Lack Transparency and Understanding of the Pay Pool Panel
Process:
Employees and supervisors at 9 of the 12 sites we visited expressed
concern that they lacked transparency over and an understanding of the
pay pool panel process and the overall rating process. Some employees
said that they did not trust the system because they think there is a
lot of secrecy in the pay pool panel process. For example, some
employees we spoke with at 1 location indicated that they had limited
understanding of the process from the moment their rating left their
supervisors' hands and went up to the "pay pool in the sky." Employees
at almost all locations told us that they did not feel as though the
pay pool panel members knew them or the work they did. Specifically, at
one location employees said that pay pool panel members did not know
them well enough to make a fair determination of their final rating.
Furthermore, employees at 8 locations expressed concern that the
visibility of their position or their assignment to the pay pool panel
influenced the rating they received. A prevalent theme at a majority of
the sites we held discussion groups at was that employees were
concerned about the pay pool panel not having direct knowledge of them
or their accomplishments. However, at a couple of the sites we visited,
employees said that this was a benefit of the system. They stated that
the additional level of review by the pay pool panel, and in some cases
a sub-pay pool panel, removed some of the subjectivity from the process
and allowed them to make management more aware of their
accomplishments.
Supervisors we spoke with also expressed concerns about their
understanding of the pay pool panel's decision on employee ratings and
the communication they received from the panel. Some supervisors we
spoke with were concerned about giving feedback, specifically praise,
to their subordinates throughout the year or prior to releasing the
final ratings because they were unsure if the pay pool panel would
sustain the rating they assigned. Moreover, supervisors at some of our
discussion groups expressed frustration regarding the pay pool panel's
lack of communication about their subordinates' final ratings and its
rationale for its final ratings. In instances where changes were made
to a rating, supervisors at half of the installations we visited told
us that they were unsure how to give employees feedback on their final
rating because they felt their employees had earned a different rating
and the panel did not provide evidence to explain why it changed the
rating.
Rapid Pace of System Implementation:
Another theme that emerged from our discussions with both supervisors
and employees was that NSPS was implemented before all of the glitches
with the system were identified and resolved. Employees described
instances where they received incomplete information during training,
as well as instances where the trainer could not provide answers to
their questions. For example, one employee told us that he and others
did not receive answers to the questions they submitted to the online
question box. The employee told us that management at that location
stated that they were unable to answer some questions they received.
Employees at another location described feeling as though they were
turned loose to figure things out for themselves, because the trainers
could not answer employee questions. One employee said that it felt as
though the system "hit the street running."
Another theme that emerged from our discussion groups with both
employees and supervisors was the haste with which the online tool--the
PAA--was rolled out, as well as the difficulties they continued to
experience in using this tool, despite several different iterations of
the program attempting to correct the problems. Employees and
supervisors at several locations described the system as being fraught
with problems. For example, they said the tool was nonintuitive and not
user-friendly, or as one employee called it, "user hostile."
Specifically, during a couple of our discussion groups we heard that
users were entering information into the system without knowing if they
missed key steps or if their information would be lost before saving.
In addition, during one of our discussion groups, employees who were
trained to train other employees on NSPS told us that they found it
particularly difficult to train employees on the new online tool
because of the new versions and updates that were released to correct
problems with the system. The trainers told us that in some cases they
were learning how to use the new versions at the same time as the
employees they were supposed to be training. As a result, employees
told us that they did not know whom to turn to for answers to their
questions about the performance management system and online tool.
DOD Has Not Developed a Plan for Addressing Issues Raised by Employees:
DOD has not developed a specific action plan to address critical issues
raised by employees in forums such as DOD's survey of employees and
other avenues, such as the PEO's evaluation of NSPS through focus
groups, according to PEO. As required by the National Defense
Authorization Act for Fiscal Year 2004[Footnote 40], OPM issued
regulations requiring each agency to conduct an annual survey of its
employees to assess leadership and management practices that contribute
to agency performance and employee satisfaction with aspects of their
organization.According to OPM, survey information allows organizations
to focus their efforts and to improve various programs and processes.
Further, OPM developed supplementary guidance recommending that
agencies use survey results to provide feedback to employees and
develop and implement an action plan. Specifically, it suggests that,
after the survey results have been reviewed, agencies have a
responsibility to provide feedback to their employees on the results,
as well as to let employees know the intended actions to address the
results and progress on these actions. The guidance further suggests,
and we believe it is a best practice, that agencies develop and
implement an action plan to guide their efforts to address the results
of the employee surveys.
Through our own analysis of DOD's survey and the discussion groups we
held with employees and supervisors, we determined that employees under
NSPS have generally negative perceptions regarding some aspects of
NSPS. Further, PEO's analysis of its most recent focus groups also
showed that employees had concerns about NSPS.[Footnote 41] For
example, PEO found that employees were concerned about the potential
loss of their cost-of-living increase, the existence of adequate
funding for pay increases and bonuses, and the lack of direct
supervisory contact by their rater, among others.[Footnote 42] PEO
issued its evaluation plan in 2007, the purpose of which is to describe
the approach, types of data, and general time frames that PEO will use
to evaluate and report on NSPS, including identifying aspects for
modification and improvement. In addition, the evaluation plan
specifies data sources, including employee attitude surveys, focus
groups, and lessons learned. This evaluation plan is a first step
toward successful implementation of NSPS.
According to an official within PEO, the office has gathered
information about employee perceptions since the onset of the system's
implementation and has used the information to make some adjustments to
the system. However, the office has not developed a formal plan to
address all employee issues. Further, an official within PEO stated
that the office is hesitant to develop an action plan this early in the
implementation process because NSPS's performance management process is
relatively new and employees have not had a lot of time to become
acclimated to the new processes and procedures. Further, theories of
organizational transformation state that it takes years for large-scale
organizational changes to be successfully integrated into the
organization. Similarly, OPM studies on federal government
demonstration projects for performance management show that employees'
attitudes were initially negative toward demonstration performance
management systems; however, over time, these same employees developed
more positive attitudes toward the systems.[Footnote 43] Given this, it
is reasonable for DOD to allow employees some time to accept the
changes that NSPS brought about; however, it is also prudent for PEO to
consider possible actions it could take to address persistent negative
employee perceptions, particularly those perceptions that are not
directly related to accepting a new system. For example, one prevalent
theme from our discussion group was the potential for employees'
writing skills to influence the panels' assessments of their
performance. Without a plan to address employees' negative perceptions
of NSPS, DOD could miss opportunities to make changes that could lead
to greater employee acceptance and, ultimately, successful
implementation of NSPS's performance management system.
Conclusions:
DOD's implementation of a more performance-and results-based personnel
system has positioned the agency at the forefront of a significant
transition facing the federal government. NSPS is intended to move DOD
from, in some cases, a pass or fail assessment of employees'
performance to a detailed assessment of employee performance that is
linked to pay increases. We recognize that DOD faces many challenges in
implementing NSPS, as any organization would in implementing a large-
scale organizational change. However, the department has not fully
addressed some key internal safeguards that could help it ensure the
fairness and credibility of NSPS. Specifically, DOD cannot identify
anomalies in predecisional rating results that might raise concerns
about the equity of the system. Until DOD requires a third party to
analyze the predecisional results of the ratings, it cannot be certain
that NSPS performance management system is achieving consistency,
equity, and nondiscrimination in the determination and assignment of
employee ratings before those ratings are finalized. In addition,
failure to provide all employees with key performance feedback on how
their final rating and share value compares to those of other employees
could lead to employee distrust of the process and overall system.
Finally, DOD's NSPS guidance has discouraged the system from making
meaningful distinctions in employee performance. Unless DOD encourages
pay pools to make meaningful distinctions in employee performance to
the fullest extent possible, as warranted by employees' performance as
compared to the standards, employees will continue to feel devalued,
which may result in further deterioration of morale and motivation.
Furthermore, prevalent themes from our discussion groups, such as the
perception of the pay pool process as secretive and the belief that
employees will be rated a "3" no matter how well or poorly they
perform, suggest that employees lack confidence in NSPS. Taken
together, the absence of these safeguards and the negative, and
declining, employee perceptions of NSPS are cause for concern about the
success of the performance management system. NSPS is a new program and
organizational change requires time for employees to accept the system.
That said, DOD civilian employees will continue to question the
fairness of their ratings and will lack confidence in the system until
DOD develops an action plan and takes specific steps to mitigate
negative employee perceptions of NSPS.
Recommendations for Executive Action:
To better address the internal safeguards and improve employee trust in
the NSPS performance management system, we recommend that the Secretary
of Defense direct the National Security Personnel System Senior
Executive to take the following four actions:
* Require a third party to perform predecisional demographic and other
analysis as appropriate for pay pools.
* Require commands to publish the final overall rating results.
* Provide guidance to pay pools and supervisors that encourages them to
rate employees appropriately, including using all categories of ratings
as warranted by comparing employees' individual performance against the
standards.
* Develop and implement a specific action plan to address employee
perceptions of NSPS ascertained from feedback avenues such as, but not
limited to, DOD's survey and DOD's and GAO's employee focus groups. For
example, the plan should include actions to mitigate employee concerns
about the potential influence that employees' and supervisors' writing
skills have on the panels' assessment of employee ratings and the lack
transparency and understanding of the pay pool panel process.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, DOD concurred or
partially concurred with three of our four recommendations to better
address the internal safeguards and improve employee trust in the NSPS
performance management system. DOD did not concur with our
recommendation to require a third party to perform predecisional
demographic and other analysis as appropriate for pay pools. DOD also
provided technical comments, which we have incorporated in the report
as appropriate. DOD's official comments are reprinted in appendix V.
DOD concurred with our recommendation to require commands to publish
the final overall rating results. DOD noted that a vast majority of
organizations under NSPS are publishing the overall final rating
results, and stated that it will take steps to require all
organizations under NSPS to share overall rating results with their
employees.
DOD partially concurred with our recommendation to provide guidance to
pay pools and supervisors that encourages them to rate employees
appropriately, including using all categories of ratings as warranted
by comparing employees' individual performance against the standards.
DOD noted that ratings under NSPS rest firmly on the foundation of the
written assessments and that the transition to NSPS requires leaders to
demonstrate a firm commitment to rigorous, fact-based rating, as well
as training and other efforts to "recalibrate" DOD's workforce
expectations from previous performance management systems in which
nearly all employees got the highest available rating. We agree that
NSPS was designed to assess employee performance using written
assessments compared to performance indicators. Further, we
acknowledged in the report that PEO and the components' training and
guidance on ratings were part of the transition process aimed at the
majority of the employees who were, in the past, rated as "pass" or at
the highest available rating. DOD, however, noted that it did not agree
with our conclusion that it is questionable whether meaningful
distinctions are being made in NSPS employees' performance ratings,
stating that our report relied heavily on workforce opinions gleaned
from focus group discussions. Our conclusion, on the contrary, was
based on our analysis of discussion with management (including
performance review authorities, pay pool managers, pay pool panel
members, rating officials, and NSPS program managers or transition
managers) at the 12 sites we visited, as well as during interviews with
officials at the PEO and component headquarters. Our analysis of these
officials' interpretation of the guidance among pay pool panels and
rating officials consistently indicated that there was hesitancy to
rate employees above or below a "3." DOD further commented that it does
"not accept the assumption" underlying our conclusion that pay pools
and rating officials were not rating employees appropriately. We never
assumed that pay pools and rating officials did not rate employees
appropriately. Instead, as we stated in the draft, we were unable to
determine whether the final distributions were meaningful because we do
not have specific knowledge of employees' performance. DOD also noted
that an employee has recourse, through the reconsideration process, if
the employee believes a rating was "unfair" or did not result from
meaningful distinctions. While we believe a reconsideration process is
an important part of a performance management process, we do not
necessarily think that the number of employees who filed
reconsiderations or the outcomes of the reconsiderations are alone
appropriate to determine whether employees believe their ratings are
unfair or that meaningful distinctions were made. In fact, during our
discussion groups at four locations, we heard that employees did not
always choose to use the reconsideration process because they feared
retribution from management and their supervisors. Lastly, DOD noted
that suggesting that all rating levels be used, despite the caveat that
they be "warranted," could be interpreted as mandating rating
distributions based on other factors. Our recommendation, however,
states that PEO should provide guidance to pay pools and supervisors
that encourages them to rate employees appropriately, including using
all categories as warranted by comparing employees' performance against
the standards. The essence of our recommendation reinforces that
performance evaluations must be based on the employee's actual
performance measured against the standard criteria, rather than on a
preconceived notion of a normal rating distribution, as DOD noted. By
providing such reinforcement, we believe DOD will better implement
meaningful distinctions in employees' performance and improve employee
trust in the system.
DOD partially concurred with our recommendation to develop and
implement a specific action plan to address employee perceptions. In
its written response, DOD stated that the department will address areas
of weakness identified in its evaluation of NSPS. It further commented
that it is premature to draw actionable conclusions from its recent
survey, and it is, therefore, institutionalizing a continuous
improvement strategy to give employees time to adjust to and accept the
new performance management system. While we recognize that employees
often require an adjustment period following any large-scale
organizational transformation and acknowledged the department's efforts
to correct issues with the system, such as with the automated
performance appraisal tools, we believe that DOD's survey data, though
preliminary, provide valuable insight into employee perceptions about
NSPS. We, as well as the Office of Personnel Management, note that it
is a best practice for agencies to use employee survey data by
developing and implementing an action plan to guide its efforts to
address the results of such surveys. Accordingly, we continue to
believe that the development of a plan to address employees' negative
perceptions of NSPS could lead to greater employee acceptance and,
ultimately, could better enable successful implementation of the NSPS
performance management system.
DOD did not concur with our recommendation to require a third party to
perform an independent, predecisional demographic and other analysis as
appropriate for pay pools. In DOD's written response, it stated that
predecisional demographic and other analysis was not a "prescribed"
safeguard. We agree that neither the National Defense Authorization Act
for Fiscal Year 2008 nor the original statutory authority for NSPS
prescribed predecisional analysis. However, the National Defense
Authorization Act for Fiscal Year 2008 did direct GAO to (1) review the
extent to which DOD had effectively implemented prescribed
"accountability mechanisms" to include "adherence to merit principles"
and "effective safeguards to ensure that the management of the system
is fair and equitable and based on employee performance" and (2) assess
other "internal safeguards." [Footnote 44] As part of our mandate to
review the adherence of NSPS to merit system principles and internal
safeguards, we examined whether DOD was performing predecisional
analysis because it was identified in our prior work as a practice used
by leading public sector organizations. Further, we have emphasized the
need for predecisional analysis as part of performance management
systems' internal safeguards since DOD first proposed NSPS.[Footnote
45] However, we revised the report to clarify that predecisional
analysis was not specified in the act. We continue to believe that our
recommendation has merit and that independent, third-party
predecisional analyses of rating results are a key internal safeguard
for performance management systems in the federal government that can
help agencies ensure that their systems adhere to merit system
principles and are fair, equitable, and based on employee performance.
In its comments regarding the predecisional issue, DOD noted that its
pay pool panel process provides checks and balances for fair and
equitable ratings. We commended DOD's efforts in our report, noting
that the various levels of reviews incorporated into the department's
process were steps toward ensuring that predecisional internal
safeguards are employed; however, we believe that such reviews are not
sufficient to safeguard fair and equitable rating results because DOD
is unable to determine whether rating results under the system are
consistent, equitable, or nondiscriminatory prior to the ratings'
certification. Furthermore, DOD's process does not include a review of
all rating results to identify any anomalies. In fact, not all pay pool
panels conduct 100 percent reviews of employee appraisals and
assessments. As we noted in our report, some panels may review a sample
of employees' appraisals and assessments. Moreover, we found that one
quarter of the pay pools we visited analyzed the predecisional results
of the rating distribution according to demographics. As a result, DOD
is inconsistently taking steps to implement this safeguard. DOD further
commented that the rating reconsideration process and the Equal
Employment Opportunity complaint process serve as another means for
ensuring fairness in ratings. While we believe the reconsideration and
complaint processes are an important part of the system, they do not
take the place of predecisional reviews to identify potential anomalies
or significant variances before ratings are finalized. DOD also stated
that while demographic and other analyses can be used to ensure the
process is fair and equitable, such analyses should be done after the
ratings are finalized--noting that predecisional analysis may have
detrimental effects on the credibility of the system. We agree with DOD
that analyses done after the ratings are finalized are important and
that any predecisional analyses should not be used to manipulate the
results to achieve some type of parity among various groups of
employees. However, we continue to believe that identifying an anomaly
in the ratings prior to finalizing those ratings would allow management
to investigate the situation and determine whether any non-merit-based
factors contributed to the rating results. We disagree with DOD that a
predecisional analysis could have detrimental effects on the
credibility of the system. As we noted in the report, the purpose of
this predecisional analysis is not intended to change the results to
portray an "ideal" distribution, to alter the outcome of the
performance management process, or to change the rating results unless
a mistake was identified. Instead, we stated that the predecisional
analysis could enable management to identify any potential egregious
decisions or investigate any potential problems, such as blatant
discrimination, in a transparent manner before finalizing the ratings.
We are sending copies of this report to the appropriate congressional
committees. We will make copies available to others upon request. This
report will be available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202)512-3604 or by e-mail at farrellb@gao.gov. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. GAO staff who made major
contributions to the report are listed in appendix VI.
Signed by:
Brenda S. Farrell:
Director, Defense Capabilities and Management:
List of Congressional Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Joseph I. Leiberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable Henry A. Waxman:
Chairman:
The Honorable Tom Davis:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
In conducting this review, we limited our scope to the performance
management aspect of the National Security Personnel System (NSPS).
Therefore, we addressed neither performance management of the Senior
Executive Service at the Department of Defense (DOD) nor other aspects
of NSPS, such as classification and pay.
Determination of Implementation of Internal Safeguards and
Accountability Mechanisms:
To determine the extent to which DOD has implemented safeguards to
ensure that NSPS's performance management system is fair, effective,
and credible, we used the following internal safeguards and
accountability mechanisms, which were either specified in the National
Defense Authorization Act for Fiscal Year 2008 or identified in our
previous work on pay for performance management systems in the federal
government:[Footnote 46]
* Involve employees, their representatives, and other stakeholders in
the design of the system, to include employees directly involved in
validating any related implementation of the system.
* Assure that the agency's performance management systems link employee
objectives to the agency's strategic plan, related goals, and desired
outcomes.
* Provide adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the performance
management system.
* Provide a process for ensuring ongoing performance feedback and
dialogue between supervisors, managers, and employees throughout the
appraisal period, and for setting timetables for review.
* Implement a pay-for-performance evaluation system to better link
individual pay to performance, and provide an equitable method for
appraising and compensating employees.
* Assure that certain predecisional internal safeguards exist to help
achieve the consistency, equity, nondiscrimination, and
nonpoliticization of the performance management process; such
safeguards include an independent reasonableness review by a third
party or reviews of performance rating decisions, pay determinations,
and promotions before they are finalized to ensure that they are merit-
based, as well as consideration by pay panels of the results of the
performance appraisal process and other information in connection with
final pay decisions.
* Assure that there are reasonable transparency and appropriate
accountability mechanisms in connection with the results of the
performance management process, to include reporting periodically on
internal assessments and employee survey results relating to
performance management and individual pay decisions while protecting
individual confidentiality.
* Assure that performance management results in meaningful distinctions
in individual employee performance.
* Provide a means for ensuring that adequate agency resources are
allocated for the design, implementation, and administration of the
performance management system.
To assess the implementation of these safeguards and accountability
mechanisms, we analyzed regulations and other guidance provided by
officials in DOD and the four components' headquarters--the Army, Navy,
Air Force, and Fourth Estate.[Footnote 47] We also reviewed documents,
such as pay pool business rules, and regulations and training
instructions obtained during 12 site visits and meetings with component-
level program offices. Within DOD, we interviewed the Under Secretary
of Defense for Personnel and Readiness, Arlington, Virginia as well as
officials at:
* the Program Executive Office (PEO), Arlington, Virginia;
* Equal Employment Opportunity Office, Arlington, Virginia;
* Department of the Army, NSPS Program Management Office, Alexandria,
Virginia;
* Department of the Navy NSPS Program Office, Washington, D.C.;
* Marine Corps NSPS Program Management Office, Quantico, Virginia;
* Department of the Air Force, NSPS Program Office, Arlington,
Virginia;
* Department of the Air Force, Air Force Personnel Center, Randolph Air
Force Base, Texas; and:
* Fourth Estate NSPS Program Management Office, Arlington, Virginia.
We also interviewed appropriate officials across all four components,
at 12 installations total. To allow for appropriate representation by
each component, we visited 3 installations per component and selected
the sites because they (1) contained a large number of civilian
employees under NSPS and (2) were geographically dispersed throughout
the United States. Specifically, we visited the following 12
installations:
* Redstone Arsenal, Alabama;
* Fort Sam Houston, Texas;
* Fort Huachuca, Arizona;
* Joint Warfare Analysis Center, Virginia;
* Naval Facilities Headquarters, D.C.;
* Marine Corps Tactical Systems Support Activity, California;
* Randolph Air Base, Texas;
* Tinker Air Base, Oklahoma;
* March Air Reserve Base, California;
* Defense Microelectronics Activity, California;
* Defense Threat Reduction Agency, Virginia; and:
* Department of Defense Inspector General, Virginia.
At the installations we visited, we interviewed the Performance Review
Authority,[Footnote 48] the pay pool manager, pay pool panel members,
rating officials, and the NSPS program officer or transition manager.
We compared and contrasted information extracted from the interviews
regarding the implementation of the safeguards. We supplemented this
testimonial evidence with policies and procedures, lessons learned, and
other documents we obtained. We then identified how and at which
installations each of the safeguards had been implemented. We also
obtained and analyzed the rating and share distributions for each of
the 12 installations visited and compared the distributions to those of
the components and DOD-wide.
Further, we analyzed documents on NSPS and performance management
published by the Office of Personnel Management, Washington, D.C., and
interviewed appropriate officials at this agency. We also analyzed
reports on performance management and NSPS published by the U.S. Merit
Systems Protection Board, the Congressional Research Service, and GAO.
Finally, we interviewed a representative from the American Federation
of Government Employees as well as the coalition of DOD unions and
analyzed relevant legal documents, such as the outcome of NSPS
lawsuits.
Determination of Civilian Personnel's Perceptions of NSPS:
To determine how DOD civilian employees perceive NSPS, we analyzed two
sources of employee perceptions or attitudes. First, we analyzed the
results of DOD's survey of civilian employees. Second, we conducted
small group discussions with DOD civilian employees who had converted
to NSPS and administered a short questionnaire to discussion group
participants to collect information on their background, tenure with
the federal service and DOD, and attitudes toward NSPS.
Analysis of DOD Survey Results:
We analyzed employee responses to DOD's SOFS of civilian employees--
including the May 2006, November 2006, and May 2007 administrations--to
gauge employee attitudes toward NSPS and performance management in
general and to identify early indications of movement in employee
perceptions. The Defense Manpower Data Center (DMDC) within DOD has
conducted large-scale, departmentwide surveys of active military
personnel since 2002, called the Status of Forces Active Duty Survey.
DMDC has also conducted surveys of reserve military personnel for DOD
(Status of Forces Reserve survey). GAO has reviewed the survey results
from prior active and reserve military personnel surveys and found the
survey results sufficiently reliable to use for several GAO
engagements.[Footnote 49] DMDC has conducted DOD-wide surveys of
civilian employees since October 2003. The SOFS for civilian employees
was created to measure the attitudes and opinions of these employees.
The survey was developed to satisfy the requirement[Footnote 50] to
assess, among other things, employee satisfaction with leadership
policies and practices; work environment; and rewards and recognition
for professional accomplishment and personal contributions to achieving
organizational mission. According to DOD, the May 2006 SOFS for
civilian employees was the first to capture the attitudes of civilian
employees under NSPS. The May 2007 survey was administered from May 7
to June 15, 2007, to more than 102,000 DOD civilian employees.[Footnote
51]
Review of Statistical Validity of DOD's Survey of Civilians:
To review whether DOD's surveys of civilians were appropriately
designed and statistically valid, a team made up of GAO social science
analysts with survey research expertise and GAO's Chief Statistician
(1) reviewed relevant documentation provided by DMDC regarding the
survey methods used in their surveys of DOD civilians, (2) interviewed
DMDC officials who had knowledge of or were involved in the development
and administration of the DMDC surveys of civilians, and (3) reviewed
the results for selected NSPS questions from the May and November 2006
and May 2007 surveys of DOD civilians. We determined that the survey
results are sufficiently reliable for the purposes of this report;
however we identified areas for improvement.
Based on the documentation of the DMDC's surveys of DOD civilians, we
concluded that they were generally conducted in accordance with
standard research practices. The civilian survey sample design, which
determined which DOD civilians were selected for the survey, was
reasonable and allowed for making appropriate comparisons between
groups of civilians who are in the NSPS system and the rest of DOD
civilians. It also distinguished between groups of NSPS employees who
entered into the new performance system at different times (spirals
1.1, 1.2, 1.3), allowing for appropriate statistical comparisons
between groups over time. The development of the full list of DOD
civilians from which to sample, or the population sampling frame, was
reasonable, and does not appear to suffer from any significant under-or
overcoverage of the target population. The design of the sample and the
related survey respondent selection methods were appropriate to develop
statistically valid survey estimates.[Footnote 52] Based on the
reported percentage of the sample of DOD civilians who were located
(96.67 percent), it appears that respondent contact information for the
sample was adequate, allowing the survey to reach respondents at a high
rate.
Generally, DOD civilian questionnaires were appropriately designed. The
questions that are specifically related to the NSPS are developed
through a process whereby PEO officials review and suggest questions to
DMDC survey officials. PEO develops new questions and alternative
wordings for existing questions based on NSPS employee input through
focus groups as well as PEO officials' observations about the program.
DMDC's survey researchers then work with questions provided by PEO
staff to revise them as necessary for balance and clarity. The survey
was implemented via the Web and response follow-up activities made it
possible for them to reach response rates comparable to other
governmentwide surveys. Weighted response rates for the SOFS for
civilian employees were: 59 percent in May 2006, 55 percent in November
2006, and 59 percent in May 2007. Similarly, the 2006 Federal Human
Capital Survey, a large, stratified random sample survey of civilian
government employees conducted every 2 years, achieved a response rate
of 57 percent. To address nonresponse, the survey estimates
incorporated appropriate statistical weighting techniques.
Although the NSPS question items were developed using input from NSPS
program officials and employees in the new system, the wording of
questions was not pretested using cognitive interviewing techniques to
assess clarity and comprehension and to minimize the risk of differing
interpretations by those completing the questionnaires. Cognitive
testing of survey items is a good practice used by survey researchers.
We understand that survey researchers need to balance revising
questions for validity and data quality with the need for survey
questions that can be compared over time. Nonetheless, some of the
question-stem wording and response categories could be improved. For
instance, some questions' stems are worded positively and then
respondents are asked to respond to an "agree/disagree" scale. For
example, one question is worded, "To what extent do you agree or
disagree with the following statements? The performance appraisal
system I am under improves organizational performance," and the
response options are: "Strongly agree, Agree, Neither agree nor
disagree, Disagree, Strongly disagree." This question is worded
positively and the scale of responses includes both positive and
negative responses. It is difficult to interpret a response of
"Disagree" or "Strongly disagree." A respondent selecting one of these
options disagrees with the statement presented, but we cannot determine
whether they believe that the system has no influence on organizational
performance or whether they believe that organizational performance is
worse because of the system.
In addition, DMDC has not had a group of external experts review
established survey practices for suggestions and recommendations, which
is a best practice in survey research. Expert review for other large-
scale federal surveys sometimes takes the form of advisory oversight
boards, some of whose members have methodological expertise that allows
them to make suggestions about the survey processes and particular
projects.
Lastly, DMDC does not perform nonresponse analysis to clarify whether
those who did not respond to the survey may provide substantively
different answers than those who did respond. The level of nonresponse
warrants using at least some of the methods available for assessing
whether nonresponse bias might under-or overrepresent some respondent
views on survey questions. For instance, it is conceivable that
employees' ratings might influence whether or not they are likely to
reply to this survey, making it possible that some views are not
reflected in the survey estimates for some questions, particularly for
NSPS questions. The survey results could be interpreted more
confidently if nonresponse analysis was done to establish whether or
not it is likely that there are any systematic biases due to some
civilians being more or less likely to respond to the survey.
Discussion Groups:
We conducted 3 discussion groups with civilian employees at each of the
12 sites we visited, for a total of 36 discussion groups. Our overall
objective in using the discussion group approach was to obtain
employees' perceptions about NSPS and its implementation thus far.
Discussion groups, which are similar in nature and intent to focus
groups, involve structured small group discussions that are designed to
obtain in-depth information about specific issues. The information
obtained is such that it cannot easily be obtained from a set of
individual interviews. From each location, we obtained lists of
employees and information on their length of employment and supervisory
status. We divided these lists into three groups: employees with 0 to 5
years of service, employees with 6 or more years of service, and
supervisors. We randomly selected 20 employees from each of these three
groups.[Footnote 53] The employee names and a standard invitation were
supplied to our points of contact to disseminate to employees. At the
majority of locations, we reached our goal of meeting with 8 to 12
employees in each discussion group; however, since participation was
not compulsory, in some instances we did not reach the recommended 8
participants in the group. Discussions were held in a semistructured
manner, led by a moderator who followed a standardized list of
questions. The discussions were documented by one or two other analysts
at each location.
Scope of Our Discussion Groups:
In conducting our discussion groups, our intent was to achieve
saturation--the point at which we were no longer hearing new
information. As noted, we conducted 36 discussion groups with three
classifications of DOD civilian employees at the 12 DOD installations
we visited (see table 5). Our design allowed us to identify
differences, if any, in employee perceptions held by supervisors and
employees with different lengths of employment. Discussion groups were
conducted between November 2007 and March 2008.
Table 5: Composition of Discussion Groups:
Location: Air Force; March Air Reserve Base, California;
Employees with 0-5 years of experience: 8;
Employees with 6 or more years of experience: 12;
Supervisors: 13;
Total participants in discussion groups: 33;
Total NSPS employees at location[A]: 275.
Location: Air Force; Randolph Air Force Base,Texas;
Employees with 0-5 years of experience: 9;
Employees with 6 or more years of experience: 9;
Supervisors: 10;
Total participants in discussion groups: 28;
Total NSPS employees at location[A]: 1,487.
Location: Air Force; Tinker Air Force Base, Oklahoma;
Employees with 0-5 years of experience: 13;
Employees with 6 or more years of experience: 15;
Supervisors: 7;
Total participants in discussion groups: 35;
Total NSPS employees at location[A]: 2,538.
Location: Army; Redstone Arsenal, Alabama;
Employees with 0-5 years of experience: 11;
Employees with 6 or more years of experience: 10;
Supervisors: 11;
Total participants in discussion groups: 32;
Total NSPS employees at location[A]: 1,108.
Location: Army; Fort Huachuca, Arizona;
Employees with 0-5 years of experience: 9;
Employees with 6 or more years of experience: 10;
Supervisors: 10;
Total participants in discussion groups: 29;
Total NSPS employees at location[A]: 673.
Location: Army; Fort Sam Houston, Texas;
Employees with 0-5 years of experience: 7;
Employees with 6 or more years of experience: 7;
Supervisors: 7;
Total participants in discussion groups: 21;
Total NSPS employees at location[A]: 1,190.
Location: Navy; Joint Warfare Analysis Center, Dahlgren, Virginia;
Employees with 0-5 years of experience: 12;
Employees with 6 or more years of experience: 11;
Supervisors: 11;
Total participants in discussion groups: 34;
Total NSPS employees at location[A]: 467.
Location: Navy; Naval Facilities Headquarters, Navy Yard, D.C.;
Employees with 0-5 years of experience: 12;
Employees with 6 or more years of experience: 7;
Supervisors: 7;
Total participants in discussion groups: 26;
Total NSPS employees at location[A]: 3,057.
Location: Navy; Marine Corps Tactical Systems Support Activity, Camp
Pendleton, California;
Employees with 0-5 years of experience: 9;
Employees with 6 or more years of experience: 11;
Supervisors: 12;
Total participants in discussion groups: 32;
Total NSPS employees at location[A]: 183.
Location: Fourth Estate; Defense Microelectronics Activity, California;
Employees with 0-5 years of experience: 8;
Employees with 6 or more years of experience: 15;
Supervisors: 11;
Total participants in discussion groups: 34;
Total NSPS employees at location[A]: 121.
Location: Fourth Estate; DOD Inspector General, Arlington, Virginia;
Employees with 0-5 years of experience: 7;
Employees with 6 or more years of experience: 16;
Supervisors: 8;
Total participants in discussion groups: 31;
Total NSPS employees at location[A]: 1,316.
Location: Fourth Estate; Defense Threat Reduction Agency, Ft. Belvoir,
Virginia;
Employees with 0-5 years of experience: 4;
Employees with 6 or more years of experience: 10;
Supervisors: 7;
Total participants in discussion groups: 21;
Total NSPS employees at location[A]: 616.
Location: Fourth Estate; Total;
Employees with 0-5 years of experience: 109;
Employees with 6 or more years of experience: 133;
Supervisors: 114;
Total participants in discussion groups: 357[B];
Total NSPS employees at location[A]: 13,031.
Source: GAO.
[A] The totals listed include employees spiraled into NSPS as of
February 2008.
[B] For one questionnaire we received, the location was not provided by
the respondent; therefore, the total participants for all discussion
groups above sums up to 356. However, we received questionnaires from
357 participants.
[End of table]
Methodology of Our Discussion Groups:
A discussion guide was developed to facilitate the discussion group
moderator in leading the discussions. The guide helped the moderator
address several topics related to civilian employees' perceptions of
the performance management system, including their overall perception
of NSPS and the rating process, the training they received on NSPS, the
communication they have with their supervisor, positive aspects of
NSPS, and any changes they would make to NSPS, among others. Each
discussion group began with the moderator greeting the participants,
describing the purpose of the study, and explaining the procedures for
the discussion group. Participants were assured that all of their
comments would be discussed in the aggregate or as part of larger
themes that emerged. The moderator asked participants open-ended
questions related to NSPS. All discussion groups were moderated by a
GAO analyst, while at least one other GAO analyst observed the
discussion group and took notes. After each discussion group, the
moderator and note taker reviewed the notes from the session to ensure
that all comments were captured accurately.
Content Analysis:
We performed content analysis of our discussion group sessions in order
to identify the themes that emerged during the sessions and to
summarize participant perceptions of NSPS. We reviewed responses from
several of the discussion groups and created a list of themes and
subthemes. We then reviewed the comments from each of the 36 discussion
groups and assigned each comment to the appropriate subtheme category,
which was agreed upon by two analysts. If agreement was not reached on
a comment's placement in a category, another analyst reconciled the
issue by placing the comment in either one or more of the categories.
The responses in each category were then used in our evaluation and
discussion of how civilian employees perceive NSPS.
Limitations:
Discussion groups are not designed to (1) demonstrate the extent of a
problem or to generalize the results to a larger population, (2)
develop a consensus to arrive at an agreed-upon plan or make decisions
about what actions to take, or (3) provide statistically representative
samples or reliable quantitative estimates. Instead, discussion groups
are intended to provide in-depth information about participants'
reasons for holding certain attitudes about specific topics and to
offer insights into the range of concerns and support for an issue.
Specifically, the projectability of the information obtained during our
discussion groups is limited for two reasons. First, the information
gathered during our discussion groups on NSPS represents the responses
of only the civilian employees present in our 36 discussion groups. The
experiences of other civilian employees under NSPS who did not
participate in our discussion groups may have varied. Second, while the
composition of our discussion groups was designed to assure a
distribution of civilian employees under NSPS, our sampling did not
take into account any other demographic or job-specific information.
Rather, our groups were determined solely on the basis of the
employee's supervisor or nonsupervisor classification and the
employee's length of service with DOD.
Use of a Questionnaire to Supplement Discussion Group Findings:
We administered a questionnaire to discussion group participants to
obtain further information on their background and perceptions of NSPS.
The questionnaire was administered and received from 357 participants
of our discussion groups. The purpose of our questionnaire was to (1)
collect demographic data from participants for the purpose of reporting
with whom we spoke (see table 6); (2) collect information from
participants that could not easily be obtained through discussion,
e.g., information participants may have been uncomfortable sharing in a
group setting; and (3) collect some of the same data found in past DOD
surveys. Specifically, the questionnaire included questions designed to
obtain employees' perceptions of NSPS as compared to their previous
personnel system; the accuracy with which they felt their ratings
reflected their performance; and management's methods for conveying
individual and group rating information. Since the questionnaire was
used to collect supplemental information and was administered solely to
the participants of our discussion groups, the results represent the
opinions of only those employees who participated in our discussion
groups. Therefore, the results of our questionnaire cannot be
generalized across the population of DOD civilian employees.
Table 6: Table 6: Composition of Discussion Groups by Demographic
Category per Component:
Category: Male;
Service: Air Force: 64;
Service: Army: 50;
Service: Navy: 62;
Service: Fourth Estate: 55;
Service: Total: 231.
Category: Female;
Service: Air Force: 32;
Service: Army: 32;
Service: Navy: 30;
Service: Fourth Estate: 31;
Service: Total: 125.
Category: Total;
Service: Air Force: 96;
Service: Army: 82;
Service: Navy: 92;
Service: Fourth Estate: 86;
Service: Total: 356[A].
Category: American Indian or Alaskan Native;
Service: Air Force: 2;
Service: Army: 1;
Service: Navy: 0;
Service: Fourth Estate: 0;
Service: Total: 3.
Category: Asian;
Service: Air Force: 13;
Service: Army: 2;
Service: Navy: 6;
Service: Fourth Estate: 7;
Service: Total: 28.
Category: Black/African American;
Service: Air Force: 7;
Service: Army: 16;
Service: Navy: 7;
Service: Fourth Estate: 17;
Service: Total: 47.
Category: Hispanic;
Service: Air Force: 5;
Service: Army: 1;
Service: Navy: 1;
Service: Fourth Estate: 8;
Service: Total: 15.
Category: Native Hawaiian or other Pacific Islander;
Service: Air Force: 2;
Service: Army: 0;
Service: Navy: 2;
Service: Fourth Estate: 1;
Service: Total: 5.
Category: White;
Service: Air Force: 65;
Service: Army: 56;
Service: Navy: 71;
Service: Fourth Estate: 48;
Service: Total: 240.
Category: Missing or Non-response;
Service: Air Force: 2;
Service: Army: 6;
Service: Navy: 5;
Service: Fourth Estate: 5;
Service: Total: 18.
Category: Total;
Service: Air Force: 96;
Service: Army: 82;
Service: Navy: 92;
Service: Fourth Estate: 86;
Service: Total: 356[A].
Source: GAO.
[A] Participants voluntarily self-reported demographic information in
our questionnaire; some participants did not provide responses for all
demographic questions. In addition, participants could select more than
one response category for the ethnic and racial questions. Further,
this table does not include results from one questionnaire, because we
were unable to determine the service with which it was associated.
Therefore, totals may not match overall total of 357 participants.
[End of table]
We conducted our review from August 2007 to July 2008 in accordance
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient and
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.
[End of section]
Appendix II: Example of Linking Performance to Mission and Objectives:
This slide was one of many presented to employees at Fort Sam Houston
as part of a briefing titled "Garrison Action Plan and IPB." The slide
is designed to show employees that their work and performance are
directly aligned with the organization's mission goals. Specifically,
this chart shows National Security Personnel System (NSPS) as the
foundation or bottom of the pyramid leading up to the command's
strategic plan. Further, the chart was designed to show employees that
their individual objectives--which were to be "SMART"--should connect
to the garrison's action plan and ultimately to the strategic plan.
Figure 4: Example of Linking Performance to Mission and Objectives:
[See PDF for image]
This figure illustrates an example of linking performance to mission
and objectives, as follows:
Performance Plan is really the foundation:
Illustration of a pyramid with four levels:
Base level: NSPS individual performance plans and GS/GM support forms;
Second level: Operating plans (METL/CLS);
* Appropriate to your position:
- Garrison mission; director; office chief;
- METL task;
Third level: Garrison action plan:
* SMART: Strategic action plan (Specific, Measurable, Aligned,
Realistic and relevant, Timed);
- Objective/initiative;
- Metric;
Top level: IMCOM Strat plan;
* Appropriate to your position:
- Garrison mission; director; office chief;
- METL task;
Part B: Relevant organizational mission/strategic goals.
Source: DOD.
[End of figure]
[End of section]
Appendix III: Additional Responses to 2007 Status of Forces Survey of
DOD Civilian Employees:
In addition to the responses to the Department of Defense's (DOD)
Status of Forces Survey-Civilian (SOFS-C) we presented on page 30, we
also identified other employee responses related to the National
Security Personnel System (NSPS) or performance management from the
2007 SOFS-C. The survey asked DOD civilian employees questions on
various topics, such as overall satisfaction, leadership and
management, retention, personnel actions, motivation/development/
involvement, performance management, and the NSPS. The following tables
provide estimated percentage of employee responses.
Table 7: Estimated Percentage of Employees Responding to Questions
about Overall Satisfaction and Leadership and Management in May 2007
Status of Forces Survey-Civilian:
Question: Overall satisfaction; Overall satisfaction with pay;
Employee description: DOD;
Response: Satisfied: 62%;
Response: Neither: 16%;
Response: Dissatisfied: 20%.
Question: Overall satisfaction; Overall satisfaction with pay;
Employee description: NSPS;
Response: Satisfied: 63;
Response: Neither: 16;
Response: Dissatisfied: 19.
Question: Leadership and management; Overall, how satisfied are you
with management at your organization?;
Employee description: DOD;
Response: Satisfied: 49;
Response: Neither: 25;
Response: Dissatisfied: 26.
Question: Leadership and management; Overall, how satisfied are you
with management at your organization?;
Employee description: NSPS;
Response: Satisfied: 54;
Response: Neither: 22;
Response: Dissatisfied: 24.
Question: Leadership and management; How satisfied are you with the
policies and practices of your senior leaders?;
Employee description: DOD;
Response: Satisfied: 49;
Response: Neither: 27;
Response: Dissatisfied: 25.
Question: Leadership and management; How satisfied are you with the
policies and practices of your senior leaders?;
Employee description: NSPS;
Response: Satisfied: 52;
Response: Neither: 25;
Response: Dissatisfied: 24.
Question: Leadership and management; How satisfied are you with the
recognition you receive for doing a good job?;
Employee description: DOD;
Response: Satisfied: 48;
Response: Neither: 26;
Response: Dissatisfied: 26.
Question: Leadership and management; How satisfied are you with the
recognition you receive for doing a good job?;
Employee description: NSPS;
Response: Satisfied: 50;
Response: Neither: 25;
Response: Dissatisfied: 24.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("satisfied") and negative
("dissatisfied") responses. That is, "satisfied" is the estimated
percentage of employees who responded either "satisfied" or "very
satisfied," while "dissatisfied" is the estimated percentage of
employees who responded either "dissatisfied" or "very dissatisfied."
[End of table]
Table 8: Estimated Percentage of Employees Responding to Questions
about Leadership and Management, Motivation/Development/Involvement,
and Performance Management in May 2007 Status of Forces Survey-
Civilian:
Question: Leadership and management; I have trust and confidence in my
supervisor;
Employee description: DOD;
Agree: 62%;
Neither: 19%;
Disagree: 19%.
Question: Leadership and management; I have trust and confidence in my
supervisor;
Employee description: NSPS;
Agree: 66;
Neither: 17;
Disagree: 17.
Question: Leadership and management; Managers/supervisors deal
effectively with reports of prejudice and discrimination;
Employee description: DOD;
Agree: 52;
Neither: 34;
Disagree: 13.
Question: Leadership and management; Managers/supervisors deal
effectively with reports of prejudice and discrimination;
Employee description: NSPS;
Agree: 56;
Neither: 33;
Disagree: 10.
Question: Leadership and management; Managers/supervisors/team leaders
work well with employees of different backgrounds;
Employee description: DOD;
Agree: 61;
Neither: 21;
Disagree: 17.
Question: Leadership and management; Managers/supervisors/team leaders
work well with employees of different backgrounds;
Employee description: NSPS;
Agree: 67;
Neither: 18;
Disagree: 14.
Question: Leadership and management; Managers review and evaluate the
organization's progress toward meeting its goals and objectives;
Employee description: DOD;
Agree: 58;
Neither: 23;
Disagree: 17.
Question: Leadership and management; Managers review and evaluate the
organization's progress toward meeting its goals and objectives;
Employee description: NSPS;
Agree: 62;
Neither: 21;
Disagree: 16.
Question: Leadership and management; I have a high level of respect for
my organization's senior leaders;
Employee description: DOD;
Agree: 51;
Neither: 24;
Disagree: 25.
Question: Leadership and management; I have a high level of respect for
my organization's senior leaders;
Employee description: NSPS;
Agree: 56;
Neither: 22;
Disagree: 22.
Question: Leadership and management; In my organization, leaders
generate high levels of motivation and commitment in the workforce;
Employee description: DOD;
Agree: 41;
Neither: 28;
Disagree: 31.
Question: Leadership and management; In my organization, leaders
generate high levels of motivation and commitment in the workforce;
Employee description: NSPS;
Agree: 45;
Neither: 27;
Disagree: 28.
Question: Motivation and morale; To what extent do you agree or
disagree with the following statement?; I know how my work relates to
the agency's goals and priorities;
Employee description: DOD;
Agree: 82;
Neither: 12;
Disagree: 5.
Question: Motivation and morale; To what extent do you agree or
disagree with the following statement?; I know how my work relates to
the agency's goals and priorities;
Employee description: NSPS;
Agree: 83;
Neither: 11;
Disagree: 5.
Question: Performance management; Performance appraisal is fair
reflection of performance;
Employee description: DOD;
Agree: 66;
Neither: 18;
Disagree: 14.
Question: Performance management; Performance appraisal is fair
reflection of performance;
Employee description: NSPS;
Agree: 68;
Neither: 18;
Disagree: 12.
Question: Performance management; Creativity and innovation are
rewarded;
Employee description: DOD;
Agree: 39;
Neither: 31;
Disagree: 28.
Question: Performance management; Creativity and innovation are
rewarded;
Employee description: NSPS;
Agree: 45;
Neither: 29;
Disagree: 24.
Question: Performance management; Promotions in work unit are based on
merit;
Employee description: DOD;
Agree: 33;
Neither: 29;
Disagree: 35.
Question: Performance management; Promotions in work unit are based on
merit;
Employee description: NSPS;
Agree: 41;
Neither: 28;
Disagree: 27.
Question: Performance management; In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Employee description: DOD;
Agree: 65;
Neither: 16;
Disagree: 14.
Question: Performance management; In most recent appraisal, I
understood what I had to do to be rated at different performance
levels;
Employee description: NSPS;
Agree: 65;
Neither: 16;
Disagree: 15.
Question: Performance management; Performance standards/expectations
are directly related to the organization's mission;
Employee description: DOD;
Agree: 66;
Neither: 24;
Disagree: 9.
Question: Performance management; Performance standards/expectations
are directly related to the organization's mission;
Employee description: NSPS;
Agree: 71;
Neither: 21;
Disagree: 8.
Question: Performance management; My bonus and cash awards depend on
how well I perform my job;
Employee description: DOD;
Agree: 52;
Neither: 20;
Disagree: 27.
Question: Performance management; My bonus and cash awards depend on
how well I perform my job;
Employee description: NSPS;
Agree: 61;
Neither: 19;
Disagree: 20.
Question: Performance management; My current performance appraisal
system motivates me to perform well;
Employee description: DOD;
Agree: 47;
Neither: 31;
Disagree: 22.
Question: Performance management; My current performance appraisal
system motivates me to perform well;
Employee description: NSPS;
Agree: 47;
Neither: 30;
Disagree: 23.
Question: Performance management; The people I work with cooperate to
get the job done;
Employee description: DOD;
Agree: 74;
Neither: 16;
Disagree: 10.
Question: Performance management; The people I work with cooperate to
get the job done;
Employee description: NSPS;
Agree: 79;
Neither: 13;
Disagree: 8.
Question: Performance management; The performance appraisal system I am
under improves organizational performance;
Employee description: DOD;
Agree: 31;
Neither: 40;
Disagree: 29.
Question: Performance management; The performance appraisal system I am
under improves organizational performance;
Employee description: NSPS;
Agree: 28;
Neither: 41;
Disagree: 31.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("agree") and negative
("disagree") responses. That is, "agree" is the estimated percentage of
employees who responded either "agree" or "strongly agree," while
"disagree" is the estimated percentage of employees who responded
either "disagree" or "strongly disagree."
[End of table]
Table 9: Estimated Percentage of Employees Responding to Question about
Performance Management in May 2007 Status of Forces Survey-Civilian:
Question: Performance management; How useful is feedback?;
Employee description: DOD;
Useful: 68%;
Neither: 25%;
Useless: 8%.
Question: Performance management; How useful is feedback?;
Employee description: NSPS;
Useful: 68;
Neither: 25;
Useless: 7.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("useful") and negative
("useless") responses. That is, "useful" is the estimated percentage of
employees who responded either "useful" or "very useful," while
"useless" is the estimated percentage of employees who responded either
"useless" or "very useless."
[End of table]
Table 10: Estimated Percentage of Employees Responding to Question
about Performance Management in May 2007 Status of Forces Survey-
Civilian:
Question: Do you receive performance feedback?;
Employee description: DOD;
Yes, regularly throughout year: 33%;
Yes,occasionally or at least once during the year: 50%;
No: 16%.
Question: Do you receive performance feedback?;
Employee description: NSPS;
Yes, regularly throughout year: 36;
Yes,occasionally or at least once during the year: 51;
No: 13.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent.
[End of table]
Table 11: Estimated Percentage of Employees Responding to Questions
about Retention and Commitment in May 2007 Status of Forces Survey-
Civilian:
Question: Retention and commitment; How likely is it that you will
leave at the next available opportunity to take another job in the
federal government outside of the DOD?;
Employee description: DOD;
Likely: 33%;
Neither: 21%;
Unlikely: 46%.
Question: Retention and commitment; How likely is it that you will
leave at the next available opportunity to take another job in the
federal government outside of the DOD?;
Employee description: NSPS;
Likely: 34;
Neither: 20;
Unlikely: 47.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-1 percent. The response
categories are collapsed for positive ("likely") and negative
("unlikely") responses. That is, "likely" is the estimated percentage
of employees who responded either "likely" or "very likely," while
"unlikely" is the estimated percentage of employees who responded
either "unlikely" or "very unlikely."
[End of table]
Table 12: Estimated Percentage of Employees Responding to Questions
about the National Security Personnel System in May 2007 Status of
Forces Survey-Civilian:
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS performance management for managers/supervisors;
Employee description: National Security Personnel System: DOD;
Useful: National Security Personnel System: 71%;
Neither: National Security Personnel System: 22%;
Useless: National Security Personnel System: 7%.
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS performance management for managers/supervisors;
Employee description: National Security Personnel System: NSPS;
Useful: National Security Personnel System: 72;
Neither: National Security Personnel System: 21;
Useless: National Security Personnel System: 7.
Question: National Security Personnel System: Usefulness of NSPS
training; human resources elements for managers, supervisors, and
employees;
Employee description: National Security Personnel System: DOD;
Useful: National Security Personnel System: 70;
Neither: National Security Personnel System: 22;
Useless: National Security Personnel System: 8.
Question: National Security Personnel System: Usefulness of NSPS
training; human resources elements for managers, supervisors, and
employees;
Employee description: National Security Personnel System: NSPS;
Useful: National Security Personnel System: 70;
Neither: National Security Personnel System: 22;
Useless: National Security Personnel System: 8.
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS performance management for employees;
Employee description: National Security Personnel System: DOD;
Useful: National Security Personnel System: 66;
Neither: National Security Personnel System: 25;
Useless: National Security Personnel System: 8.
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS performance management for employees;
Employee description: National Security Personnel System: NSPS;
Useful: National Security Personnel System: 66;
Neither: National Security Personnel System: 25;
Useless: National Security Personnel System: 9.
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS pay pool management;
Employee description: National Security Personnel System: DOD;
Useful: National Security Personnel System: 64;
Neither: National Security Personnel System: 27;
Useless: National Security Personnel System: 10.
Question: National Security Personnel System: Usefulness of NSPS
training; NSPS pay pool management;
Employee description: National Security Personnel System: NSPS;
Useful: National Security Personnel System: 62;
Neither: National Security Personnel System: 27;
Useless: National Security Personnel System: 10.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-2 percent. The response
categories are collapsed for positive ("useful") and negative
("useless") responses. That is "useful" is the estimated percentage of
employees who responded either "useful" or "very useful," while useless
is the estimated percentage of employees who responded either "useless"
or "very useless."
[End of table]
Table 13: Estimated Percentage of Employees Responding to Questions
about the National Security Personnel System in May 2007 Status of
Forces Survey-Civilian:
Question: National Security Personnel System: Overall, what type of
impact will NSPS have on personnel practices in the DOD?;
Employee description: National Security Personnel System: DOD;
Positive: National Security Personnel System: 25%;
Neither: National Security Personnel System: 38%;
Negative: National Security Personnel System: 36%.
Question: National Security Personnel System: Overall, what type of
impact will NSPS have on personnel practices in the DOD?;
Employee description: National Security Personnel System: NSPS;
Positive: National Security Personnel System: 28;
Neither: National Security Personnel System: 34;
Negative: National Security Personnel System: 38.
Source: GAO analysis of DOD data.
Note: The estimated percentages are based on a 95 percent confidence
interval and the margin of error is within +/-1 percent. The response
categories are collapsed for "positive" and "negative." That is,
"positive" is the estimated percentage of employees who responded
either "positive" or "very positive," while "negative" is the estimated
percentage of employees who responded either "negative" or "very
negative."
[End of table]
[End of section]
Appendix IV: Other Themes Discussed by Department of Defense Civilians
during GAO Discussion Groups:
In addition to the themes that emerged during our discussion groups
with select Department of Defense (DOD) civilian employees, which we
presented on pages 34-39, we also identified other themes or topics
that were discussed less prevalently by employees across all of the
discussion groups we held. See table 14.
Table 14: Additional Themes that Emerged during Discussion Groups with
Select Employees:
Job objectives:
Employees at six sites we visited expressed concerns about the time and
effort it took to develop their objectives. Specifically, employees
said it was difficult to write "SMART" (Specific, Measurable, Aligned,
Realistic/Relevant, Timed) objectives that adequately captured all
aspects of their job at the start of the performance cycle because,
according to them, their jobs were often unpredictable or involved
unexpected tasks over the course of the year. Employees also expressed
concern over the fact that their objectives had to be rewritten several
times during the year to incorporate shifting job duties. Others felt
that their objectives were written in such a manner that made them
impossible to exceed.
Teamwork:
At six sites, employees we spoke with told us that NSPS has, and will
continue to have, a negative impact on team work. Some participants in
our discussion groups told us that employees no longer want to assist
each other with their work because they are worried about getting
credit for the work and would prefer to make themselves look better in
front of management. Specifically, employees were concerned that taking
the time to help others takes time away from their own work, which is
the basis for their objectives, rating, and eventual payout. Thus, we
heard from one employee that assisting others will "help out another's
pocket" while financially disadvantaging them. Further, two employees
we spoke with told us that employees are even keeping projects secret
so that they can get credit for independently completing the project.
However, at other locations we visited, participants discussed the use
of the contributing factor, collaborating with others, to counter these
employee concerns.
Reconsideration:
Employees at four sites expressed concern about the reconsideration
process. Specifically, some employees in our discussion groups told us
that even though they received information about the reconsideration
process, they would not challenge a rating because they felt management
would no longer view them as a team player. Further, some employees
expressed concern that if they did challenge their rating, their
supervisor or management would seek retribution during the next rating
cycle. Other employees saw no benefit in challenging their rating
because the disputed rating is reviewed by the same individuals who
finalized the rating.
Ratings:
As discussed on pages 34-35, employees at all sites we visited
expressed some concern over the rating process. In addition to the
concerns previously discussed, employees raised additional concerns
with the process through which their ratings were determined. Some
discussion group participants we spoke with said that more granularity
was needed in the rating distribution and share values. One employee
suggested using a 1 to 10 scale, as a way to better distinguish among
employee performance. Further, employees at four locations we visited
told us they would prefer to have their rating separate from their pay
increase. Specifically, one employee told us that a smaller payout tied
to a "good" (i.e., role model) rating was preferable. One employee, in
particular, told us that her performance is tied to her self-esteem,
including the praise she receives from management, and she did not want
it tied to money. Further, several participants told us that
supervisors were hesitant or not inclined to give employees a rating
other than a "3" because, for example, it required too much paperwork
to give a lower rating or they did not want to be seen as the "bad
guy." Still other participants expressed concern that the weights
assigned to specific objectives be used to impact ratings.
Timing of the cycle:
Employees we spoke with at eight locations told us that the lag between
when the rating period ends, when they submit their self-assessment,
and when they actually receive their rating and their payout is too
long. Some employees expressed concern that they were already several
months into the next rating cycle and working towards new objectives
before they received their rating and feedback from the previous rating
cycle. One employee in particular told us that, although the command
was almost 5 months into the rating cycle, employees at that location
did not have their objectives finalized. The employee further told us
that the prior year's discussions on objectives and midyear review
sessions were held at the same time. In addition, some employees were
concerned that there were too many competing priorities--holiday leave
and budgetary requirements--at the end of the fiscal year when the
ratings and pay panel process occurred.
Control points:
Employees we spoke with at five sites expressed confusion and
discontent over the existence of "pay lanes," "pay caps," and/or
"control points." Specifically, employees told us that they were
unaware of the pay lanes, pay caps, and control points prior to the
system's implementation and only learned of these pay constraints once
they were under the system. Employees further told us that they had
thought they could advance to the top of their pay band, potentially
earning more money through their performance increases than they would
have through General Schedule step increases. However, once the system
was implemented, several discussion group participants learned that
artificial pay constraints would not allow them to reach the top of the
pay bands and, upon reaching their pay caps, they would receive
subsequent performance payouts as bonuses.
Other positive comments on NSPS:
Discussion group participants at 11 of the 12 sites we visited spoke
positively about certain aspects of NSPS. Specifically, some discussion
group participants said that the initial design and intent of the
system were good. Specifically, some employees commented on the
system's ability to recognize performance. Employees told us that they
liked that pay increases were based on performance and not on
seniority, allowing them to receive pay increases faster than under the
General Schedule. Other employees and supervisors told us that NSPS
gives managers more flexibility to reward strong performers while
allowing them to deal more effectively with poor performers. Finally,
at some locations we heard that NSPS has increased the amount of
communication between employees and their supervisors. For example,
some discussion group participants have found that the process of
drafting their self-assessment gave them the opportunity to point out
accomplishments or activities to their supervisor that may have been
overlooked. In addition, some discussion group participants have found
that supervisors are providing their employees with more meaningful
feedback on their performance.
Source: GAO analysis.
[End of table]
[End of section]
Appendix V: Comments from the Department of Defense:
Department Of Defense:
National Security Personnel System:
Program Executive Office:
1400 Key Boulevard Suite B200:
Arlington, VA 22209-5144:
August 18, 2008:
Ms. Brenda S. Farrell:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Ms. Farrell:
This is the Department of Defense (DoD) response to your draft report,
"Human Capital: DoD Needs to Improve Implementation of and Address
Employee Concerns about Its National Security Personnel System," dated
July 17, 2008 (GAO Code 351086/GAO-08-773). We thank you for the
opportunity to review and comment on the draft report.
While the Department does not concur with all of the findings and
recommendations in the draft report, we believe it strikes a balance
between the Department's efforts to design and operate the National
Security Personnel System (NSPS) performance management system so it is
fair and credible, and the workforce's early concerns about this new,
rigorous, and consequential pay for performance approach. We appreciate
your recognition of the many safeguards we have in place. As we have
implemented NSPS, we have heard many of the same concerns as your
auditors and have attempted to differentiate between those that warrant
prompt action, and those that reflect the uncertainty and skepticism
that typically accompany major changes. We agree with your statement
that organizational transformations such as NSPS require an adjustment
period to gain employee acceptance and trust.
NSPS transforms how the workforce is evaluated, compensated, and
advanced along their career paths. Your report acknowledges that such
changes often take years to be fully successful, and we believe that to
be the case with NSPS. The Federal Human Capital Survey shows us that
even the best, long-established systems do not enjoy total workforce
support. Most of the NSPS workforce your team met with were in the
system for one year and experienced only one performance appraisal
cycle. As employees, supervisors, and managers gain practical
experience with this system and understand it better, we believe their
confidence will grow. We base this on years of experience with
personnel demonstration projects.
With respect to the system safeguards, the Department has taken great
pains to design appropriate and effective safeguards to ensure that the
performance management process is fair, equitable, and transparent. We
recognize that these attributes are necessary to be credible in the
eyes of the workforce. We continue to monitor these safeguards for
credibility and effectiveness.
Again, thank you for the opportunity to comment on the draft report.
Our responses to the recommendations for executive action include
comments on major items we would like to clarify or correct. We have
provided you technical corrections under separate cover. We appreciate
the care your team took to understand and recognize the challenges in
implementing and working under NSPS. If you have any questions
regarding this response, please do not hesitate to contact me.
Sincerely,
Signed by:
Brad Bunn:
Program Executive Officer:
Enclosure:
GAO Draft Report Dated July 17, 2008:
GAO Code 351086/GAO-08-773:
"Human Capital: DOD Needs to Improve Implementation of and Address
Employee Concerns about Its National Security Personnel System"
Department Of Defense Responses To Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the National Security Personnel System Senior Executive to
require a third party to perform pre-decisional demographic and other
analysis as appropriate for pay pools.
DOD Response: Nonconcur.
On pages 2 and 3, the draft report erroneously says that the National
Defense Authorization Act for Fiscal Year 2008 (NDAA 08) specified
that, among other safeguards, GAO assess the extent to which the system
incorporated "certain pre-decisional internal safeguards ... to help
achieve consistency, equity, nondiscrimination, and nonpoliticization
of the performance management process, e.g., independent reasonableness
reviews by a third party." Neither NDAA 08 nor the original statutory
authority for NSPS prescribes such a safeguard. The draft report adds
it among the criteria prescribed by section 9902(b)(7) of title 5,
United States Code for the NSPS performance management system.
The NSPS pay pool process provides essential safeguards to ensure that
the system adheres to merit principles, and that ratings and management
of the system are fair, equitable, and based on employee performance.
As the draft report notes, individual ratings recommended by a
supervisor are reviewed by a higher level official and by at least one
panel of management officials to ensure consistency and fairness across
the pay pool. Rating officials, reviewers, and panel members apply
standard, NSPS-wide performance indicators and benchmarks when they
consider employees' performance assessments. Employees are encouraged
to provide written self-assessments about their performance
accomplishments which helps ensure panels have a full picture; and an
employee who disagrees with his or her rating has several avenues of
redress.
in addition to the checks and balances inherent in the pay pool
process, NSPS includes a crucial safeguard for fair, equitable and
performance-based ratings: the rating reconsideration process. While
the draft report notes that some employees expressed a lack of
confidence in the process, we would point out that 2,302 employees
filed requests for reconsiderations after the FY07 performance cycle,
and 769 (or 33.41%) were decided in favor of the employee. In our view,
this demonstrates the credibility and effectiveness of the rating
reconsideration and pay pool process safeguards. We would also note
that employees under NSPS continue to have access to the Equal
Employment Opportunity (EEO) complaints process if they believe they
are victims of illegal discrimination. However, we note that since the
implementation of NSPS, the Department has not seen a demonstrable
increase in formal EEO complaints.
While we have no objection to demographic and other analyses for pay
pools, we do not believe integrating such analyses as part of the
predecisional pay pool deliberation process is warranted; and, in fact,
they may have detrimental effects on the credibility of the system.
We agree that such analyses can be used to ensure that the process is
fair and equitable and to identify and address possible barriers that
may affect some groups, but believe it should be done after the process
in complete. Such analysis must not be used to manipulate results to
achieve some type of parity among various groups. Post-decisional
analysis of results is useful to identify barriers and corrective
actions. If the information gleaned from demographic analysis
demonstrates that the results were not fair or equitable, for whatever
reason, this information could legitimately be employed to examine the
process used to achieve those results, with a view to identifying
barriers to equal employment opportunity, if any, and eliminating them
in order to achieve a more fair and equitable outcome. And if an
analysis of pay pool results uncovers illegal discrimination,
management always has the ability and obligation to take corrective
action.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the National Security Personnel System Senior Executive to
require commands to publish the final overall rating results.
DOD Response: Concur. As the draft report notes, the vast majority of
organizations under NSPS are doing this. The Department will take steps
to require all organizations under NSPS to share overall ratings
results with their employees.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the National Security Personnel System Senior Executive to
provide guidance to pay pools and supervisors that encourages them to
rate employees appropriately, including using all categories of ratings
as warranted by comparing employees' individual performance against the
standards.
DOD Response: Partially concur.
Ratings under NSPS rest firmly on the foundation of the written
assessments, and must be made in relation to the standard performance
indicators and benchmarks. Transition to this performance-based pay
system requires that leaders demonstrate a firm commitment to rigorous,
fact-based rating.
We do not agree with the generalization on page 28 that "it is
questionable whether meaningful distinctions are being made in NSPS
employees' performance ratings." The GAO report relies heavily on
workforce opinions gleaned from its focus groups; we would recommend
that GAO give more weight to NSPS' rigorous performance rating
construct and criteria. NSPS is a pay banded system, with performance
ratings and payouts that have the potential to advance employees
rapidly at rates akin to GS promotions, not just a few percentage
points in place of step increases and portions of the annual schedule
adjustments. NSPS criteria for level 3 performance recognize employees
who perform their responsibilities in a "valued" manner, effectively
meeting their performance expectations. The level 3 "valued performer"
level covers situations that require the employee to solve problems
appropriate for the pay band, not just handle routine situations. NSPS
reserves higher level ratings for employees who have significantly
exceeded performance expectations. Level 5 indicators and enhanced
level benchmarks reflect a very high bar. The system construct is that
a level 3 rating is normal, and that a higher rating will be based on
unusually high performance or good performance under unusually
demanding circumstances.
Half the DoD workforce comes from pass-fail systems where more than 99%
of those covered received a "3" or "pass." Other large segments of the
workforce come from multi-level systems, where more than 90% were rated
at levels 4 and 5. With statutory emphasis on a pay for performance
system with meaningful distinctions between the levels of performance,
and a pay banded system with potentially significant pay consequences,
our emphasis on the "valued performer" 3 level in pre-conversion
training and during mock rating processes has been to recalibrate
workforce expectations from previous systems in which nearly everyone
got the highest available rating.
We do not accept the assumption underlying the GAO recommendation that
pay pools and supervisors are not rating employees appropriately. On
page 29, the draft report includes data on the rating distributions,
which show both variance among organizations and an overall outcome of
more than 40% rated at level 4 or 5. The report also shows 1.8% of the
ratings were at the "1" and "2" level (approximately four times more
occurrences than happened under previous five-level systems). The draft
does not present facts or observations from panels to indicate they
suppressed justified ratings, only that they "were reluctant to award
`too many 4s and 5s."' Our own after-action sessions with pay pool
managers and panels indicate that they have more nuanced views than GAO
suggests, based on their application of the rating criteria to
assessments. We would also point out that NSPS performance appraisals
are based on actual performance against standard benchmarks. Suggesting
that all rating levels be used, despite the caveat that they be
`warranted," could be interpreted as mandating rating distributions
based on factors other than the rigorous evaluation of individual
employee. Finally, we note that if employees believe their ratings are
unfair or that a meaningful distinction has not been made in relation
to the standard performance indicators and benchmarks, they have
recourse to the rating reconsideration process. Of the 2,302 employees
who filed reconsideration requests, (769 or 33.41%) received a
favorable decision.
We agree that we should continue to reinforce that performance
evaluations must be based on actual performance against the standard
criteria, and not a preconceived notion of a normal rating
distribution. In continuing to train and inform those involved in the
rating process, we will ensure these concepts, which currently exist in
NSPS policies and training materials, are emphasized.
Recommendation 4: The GAO recommends that the Secretary of Defense
direct the National Security Personnel System Senior Executive to
develop and implement a specific action plan to address employee
perceptions of NSPS ascertained from feedback avenues such as, but not
limited to, DoD's survey and DoD's and GAO's employee focus groups. For
example, the plan should include actions to mitigate employee concerns
about the potential influence that employees' and supervisors' writing
skills have on the panels' assessment of employee ratings and the lack
of transparency and understanding of the pay pool panel process.
DOD Response: Partially concur.
The Department will address areas of weakness identified in our
comprehensive, in-progress evaluation of NSPS as implemented in Spiral
One in a plan of action.
At all levels in DoD, we apply continuous learning to identify
weaknesses in NSPS and its operation that may warrant attention and
adjustment. Opinions in some areas where necessary improvements are
unequivocal are acted on immediately without a formal improvement plan.
Examples include the additional courseware and training opportunities
such as iSuccess on performance objectives and assessments, a series of
improvements to the automated performance appraisal tools, additional
displays and data in the pay pool automated tool and a complementary
automated tool to roll up and analyze results from multiple pay pools,
and local pay pool changes in some of their panel representation and
business rules. Other examples are recent modifications to NSPS
implementing issuances and changes in the revised NSPS regulations.
With opinions in other areas, where issues are equivocal or people may
be reacting more to change or newness, we monitor and gather additional
facts that will help us understand the issues and decide on appropriate
courses of action, if any. DoD soon will have the results of the 2008
Status of Forces Survey. These will reflect opinions after the second
NSPS rating cycle for Spiral 1.1 employees and the first cycle for
Spirals 1.2 and 1.3. We believe it is premature to draw actionable
conclusions from the 2007 survey. (Note that the May 2006 survey opened
three weeks before Spiral 1.1 conversions, and the November 2006 survey
ran with only 25% of Spiral 1.2 employees having converted to NSPS at
that time. The 2007 survey ran shortly after Spiral 1.3 conversions.)
The draft report notes on page 35 and 36, "Results of our discussion
groups are not generalizable to the entire population of DOD civilians"
and "our previous work...have shown that organizational
transformations...requires an adjustment period to gain employee
acceptance and trust" and "major change management initiatives...can
often take several years to be fully successful." Our approach to
evaluation recognizes this reality, and therefore we are
institutionalizing a continuous improvement strategy.
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Brenda S. Farrell, (202) 512-3604, or farrellb@gao.gov.
Acknowledgments:
In addition to the contact named above, Ron Fecso, Chief Statistician;
Marion Gatling (Assistant Director), Lori Atkinson, Margaret Braley,
Renee Brown, Jennifer Harman, Ron La Due Lake, Janice Latimer, Jennifer
C. Madison, Oscar Mardis, Belva Martin, Julia Matta, Luann Moy, Carl
Ramirez, Terry Richardson, Carolyn Taylor, and Martha Tracy made key
contributions to this report.
[End of section]
Related GAO Products:
The Department of Defense's Civilian Human Capital Strategic Plan Does
Not Meet Most Statutory Requirements. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-439R]. Washington, D.C.:
February 6, 2008.
Human Capital: DOD Needs Better Internal Controls and Visibility over
Costs for Implementing Its National Security Personnel System.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-851]. Washington,
D.C.: July 16, 2007.
Human Capital: Federal Workforce Challenges in the 21st Century.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-556T]. Washington,
D.C.: March 6, 2007.
Post-Hearing Questions for the Record Related to the Department of
Defense's National Security Personnel System (NSPS). [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-582R]. Washington, D.C.: March
24, 2006.
Human Capital: Observations on Final Regulations for DOD's National
Security Personnel System. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-227T]. Washington, D.C.: November 17, 2005.
Human Capital: Designing and Managing Market-Based and More Performance-
Oriented Pay Systems. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
05-1048T]. Washington, D.C.: September 27, 2005.
Human Capital: DOD's National Security Personnel System Faces
Implementation Challenges. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-730]. Washington, D.C.: July 14, 2005.
Questions for the Record Related to the Department of Defense's
National Security Personnel System. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-771R]. Washington, D.C.: June 14, 2005.
Questions for the Record Regarding the Department of Defense's National
Security Personnel System. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-770R]. Washington, D.C.: May 31, 2005.
Post-Hearing Questions Related to the Department of Defense's National
Security Personnel System. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-641R]. Washington, D.C.: April 29, 2005.
Human Capital: Agencies Need Leadership and the Supporting
Infrastructure to Take Advantage of New Flexibilities. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-616T]. Washington, D.C.: April
21, 2005.
Human Capital: Selected Agencies' Statutory Authorities Could Offer
Options in Developing a Framework for Governmentwide Reform.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-398R]. Washington,
D.C.: April 21, 2005.
Human Capital: Preliminary Observations on Proposed Regulations for
DOD's National Security Personnel System. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-559T]. Washington, D.C.: April
14, 2005.
Human Capital: Preliminary Observations on Proposed Department of
Defense National Security Personnel System Regulations. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-517T]. Washington, D.C.: April
12, 2005.
Human Capital: Preliminary Observations on Proposed DOD National
Security Personnel System Regulations. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-432T]. Washington, D.C.: March
15, 2005.
Human Capital: Principles, Criteria, and Processes for Governmentwide
Federal Human Capital Reform. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-69SP]. Washington, D.C.: December 1, 2004.
Human Capital: Building on the Current Momentum to Transform the
Federal Government. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
04-976T]. Washington, D.C.: July 20, 2004.
DOD Civilian Personnel: Comprehensive Strategic Workforce Plans Needed.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-753]. Washington,
D.C.: June 30, 2004.
Human Capital: A Guide for Assessing Strategic Training and Development
Efforts in the Federal Government. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-546G]. Washington, D.C.: March, 2004.
Human Capital: Implementing Pay for Performance at Selected Personnel
Demonstration Projects. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-83]. Washington, D.C.: January 23, 2004.
Human Capital: Key Principles for Effective Strategic Workforce
Planning. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-39].
Washington, D.C.: December 11, 2003.
DOD Personnel: Documentation of the Army's Civilian Workforce-Planning
Model Needed to Enhance Credibility. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-1046]. Washington, D.C.: August 22, 2003.
Posthearing Questions Related to Proposed DOD Human Capital Reform.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-965R]. Washington,
D.C.: July 3, 2003.
Human Capital: A Guide for Assessing Strategic Training and Development
Efforts in the Federal Government. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-893G]. Washington, D.C.: July, 2003.
Defense Transformation: DOD's Proposed Civilian Personnel System and
Governmentwide Human Capital Reform. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-741T]. Washington, D.C.: May 1, 2003.
Human Capital: DOD's Civilian Personnel Strategic Management and the
Proposed National Security Personnel System. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-493T]. Washington, D.C.: May
12, 2003.
Human Capital: Building on DOD's Reform Efforts to Foster
Governmentwide Improvements. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-851T]. Washington, D.C.: June 4, 2003.
High-Risk Series: Strategic Human Capital Management. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-120]. Washington, D.C.:
January 2003.
Acquisition Workforce: Status of Agency Efforts to Address Future
Needs. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-55].
Washington, D.C.: December 18, 2002.
Military Personnel: Oversight Process Needed to Help Maintain Momentum
of DOD's Strategic Human Capital Planning. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-237]. Washington, D.C.:
December 5, 2002.
Managing for Results: Building on the Momentum for Strategic Human
Capital Reform. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-
528T]. Washington, D.C.: March 18, 2002.
A Model of Strategic Human Capital Management. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-02-373SP]. Washington, D.C.:
March 15, 2002.
Human Capital: Taking Steps to Meet Current and Emerging Human Capital
Challenges. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-965T].
Washington, D.C.: July 17, 2001.
Human Capital: Major Human Capital Challenges at the Departments of
Defense and State. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-
565T]. Washington, D.C.: March 29, 2001.
[End of section]
Footnotes:
[1] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-310] (Washington, D.C.:
January 2007). In 2001, we designated strategic human capital
management as a high-risk area because of the federal government's long-
standing lack of a consistent strategic approach to marshaling,
managing, and maintaining the human capital needed to maximize
government performance and ensure its accountability. GAO, High-Risk
Series: An Update, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-
241] (Washington, D.C.: January 2001).
[2] GAO, Defense Transformation: Preliminary Observations on DOD's
Proposed Civilian Personnel Reforms, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-717T] (Washington, D.C.: Apr. 29, 2003); Defense
Transformation: DOD's Proposed Civilian Personnel Systems and
Governmentwide Human Capital Reform, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-741T] (Washington, D.C.: May 1, 2003); and Human
Capital: Building on DOD's Reform Efforts to Foster Governmentwide
Improvements, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-
851T] (Washington, D.C.: June 4, 2003). See Related GAO Products at the
end of this report for additional reports we have issued related to
NSPS and performance management in the federal government.
[3] GAO, Human Capital: DOD Needs Better Internal Controls and
Visibility Over Costs for Implementing Its National Security Personnel
System, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-851]
(Washington, D.C.: July 16, 2007) and Human Capital: Observations on
Final Regulations for DOD's National Security Personnel System,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-227T] (Washington,
D.C.: Nov. 17, 2006).
[4] GAO, Results Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-488] (Washington, D.C.:
Mar.14, 2003).
[5] GAO, Post-Hearing Questions for the Record Related to the
Department of Defense's National Security Personnel System (NSPS),
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-582R] (Washington,
D.C.: Mar. 24, 2006).
[6] Pub. L. No. 110-181, § 1106(c) (2008). Specifically, section
1106(c)(1)(B) directs GAO to conduct reviews in calendar years 2008-
2010 to evaluate the extent to which the Department of Defense has
effectively implemented accountability mechanisms, including those
established in 5 U.S.C. § 9902(b)(7) and other internal safeguards. The
accountability mechanisms specified in 5 U.S.C. § 9902(b)(7) include
those that GAO previously identified as internal safeguards key to
successful implementation of performance management systems. For
example see GAO, Post-Hearing Questions for the Record Related to the
Department of Defense's National Security Personnel System (NSPS),
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-582R] (Washington,
D.C.: Mar. 24, 2006). GAO has emphasized the need for internal
safeguards since DOD first proposed NSPS. For example see GAO,
Posthearing Questions Related to Strategic Human Capital Management,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-779R] (Washington,
D.C.: May 22, 2003).
[7] For the purpose of this report, we define safeguards to include
accountability mechanisms.
[8] The Department of the Navy's NSPS policies encompass Marine Corps
civilians. The Fourth Estate includes all organizational entities in
DOD that are not in the military departments or the combatant commands,
for example, the Office of the Secretary of Defense, the Joint Staff,
the Office of the DOD Inspector General, the defense agencies, and DOD
field activities.
[9] SOFS is a series of Web-based surveys of the total force that
allows DOD to (1) evaluate existing programs/policies, (2) establish
baselines before implementing new programs/policies, and (3) monitor
progress of programs/policies and their effects on the total force.
Since 2003, the Defense Manpower Data Center has administered the SOFS
for civilian personnel on a semiannual basis. SOFS for civilian
employees includes questions about compensation, performance, and
personnel processes. Regular administrations every 6 months occurred
between October 2004 and November 2006, and annual administrations
commenced in 2007. All surveys include outcome or "leading indicator"
measures such as overall satisfaction, retention intention, and
perceived readiness, as well as demographic items needed to classify
individuals into various subpopulations. In 2004, DOD added questions
to SOFS for civilian employees pertaining specifically to NSPS. These
surveys also include items for the annual reporting requirement under
the National Defense Authorization Act for Fiscal Year 2004.
[10] These estimated percentages are based on a 95 percent confidence
interval and margin of error within +/-2 percent as reported in DOD's
Defense Manpower and Data Center's SOFS of civilian employees.
[11] Pub. L. No. 108-136, § 1101 (2003) (codified at 5 U.S.C. §§ 9901-
9904). The National Defense Authorization Act for Fiscal Year 2008
amended 5 U.S.C. § 9902. Pub. L. No. 110-181, § 1106 (2008).
[12] DOD has not applied NSPS to the Senior Executive Service because
the latter's members are under a separate governmentwide pay-for-
performance system. Additionally, DOD has not applied NSPS to the DOD
intelligence components, which include the Defense Intelligence Agency,
because these components are initiating implementation of a performance
management system called the Defense Civilian Intelligence Personnel
System (DCIPS). See 10 U.S.C. § 1601.
[13] According to PEO officials, DOD originally planned to convert
approximately 700,000 civilian employees to NSPS; however, recent
legislative changes decreased the total number of eligible civilians to
approximately 450,000.
[14] Criteria to distinguish pay pools may include, but are not limited
to, organization structure, employee job function, location, and
organization mission.
[15] Where determined appropriate due to the size of the pay pool
population, the complexity of the mission, the need to prevent
conflicts of interest, or other similar criteria, sub-pay pool panels
may be organized in a structure subordinate to the pay pool panel. Sub-
pay pool panels normally operate under the same requirements and
guidelines provided to the pay pool panel to which they belong.
[16] Pay pool panel members may not participate in payout deliberations
or decisions that directly impact their own performance assessment or
pay.
[17] The senior organization official, usually a member of the Senior
Executive Service or a General/Flag officer, serves as the Performance
Review Authority (PRA). DOD components may provide additional guidance
for the establishment of PRAs. The responsibilities of the PRA may be
assigned to an individual management official or organizational unit or
group.
[18] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[19] Department of Defense Human Resources Management and Labor
Relations Systems, 70 Fed. Reg. 66,116, 66,121 (Nov. 1, 2005).
[20] In 2004, 36 of the unions voluntarily formed the United DOD
Workers' Coalition, otherwise referred to as the "union coalition,"
which allowed the workers to have one voice in regards to NSPS. Each
union elects representatives to speak on their behalf at collaborative
coalition meetings. DOD has 45 unions, which are affiliated with 1,500
local bargaining units.
[21] American Federation of Government Employees, AFL-CIO, et al. v.
Rumsfeld, et al., 422 F. Supp. 2d 16, 35 (D.D.C. 2006), see also
American Federation of Government Employees, AFL-CIO, et al. v. Gates,
et al., 486 F. 3d 1316, 1327 (D.C. Cir. 2007). The National Defense
Authorization Act for Fiscal Year 2008 repealed the statutory
provisions at issue in both cases.
[22] Separate focus groups were held for employees, civilian and
military supervisors, and managers and practitioners from the human
resource, legal, and equal employment opportunity communities. The
focus group participants were asked to comment on the positive aspects
of NSPS' human resource systems and propose any suggested changes to
these systems.
[23] With the change to objectives-based performance plans, DOD dropped
the separate factor for "achieving results."
[24] 5 U.S.C. § 9902(e)(4).
[25] Components must certify that pay pool funds are used only for the
compensation of civilian employees, as required by 5 U.S.C. §
9902(e)(6).
[26] Percentages were determined using previous years data on General
Schedule workforce within grade and quality step increases, and
promotions between grades banded in NSPS.
[27] GAO, Human Capital: DOD Needs Better Internal Controls and
Visibility over Costs for Implementing its National Security Personnel
System, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-851]
(Washington, D.C.: July 16, 2007).
[28] 73 Fed. Reg. 29,882 (May 22, 2008). The proposed regulations
revise the NSPS regulations published in November 2005 in response to
significant changes made to the NSPS law by the National Defense
Authorization Act for Fiscal Year 2008.
[29] GAO, Financial Regulators: Agencies Have Implemented Key
Performance Management Practices, but Opportunities Exist for
Improvement, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-678]
(Washington, D.C.: June 18, 2007).
[30] In response to comments on the original proposed NSPS regulations
published in the Federal Register in 2005, PEO stated that it agrees
with the concept of incorporating additional transparency in the
performance management system, but not at the expense of employee
confidentiality and privacy. Management offers alternatives to
publishing individual ratings, to include publishing summary results
and aggregate data such as average ratings and payouts within pay pools
and job foci. 70 Fed. Reg. 66,116, 66,155 (Nov. 1, 2005).
[31] Employees are assessed on job objectives. Scores are given to each
job objective, and the average of these scores is the employee's
rounded rating, or rating of record.
[32] GAO, Human Capital: Preliminary Observations on the
Administration's Draft Proposed "Working for America Act, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-142T] (Washington, D.C.: Oct.
5, 2005).
[33] DOD's efforts to assess employee perceptions of NSPS have been
captured within three surveys. Since NSPS implementation began, the
SOFS for civilian employees was conducted in May 2006, November 2006,
and May 2007. Results from a fourth survey conducted in 2008 were not
available at the time of this report.
[34] U.S. Office of Personnel Management, Working for America: An
Assessment of the Implementation of the Department of Defense National
Security Personnel System (Washington, D.C.: May 2007).
[35] For the May 2007 survey, 102,000 civilians were surveyed and the
weighted response rate was 59 percent. Estimated percentages are
reported for collapsed positive and negative responses. That is, agree
includes those that responded both agree and strongly agree, and
disagree includes responses for both disagree and strongly disagree.
The estimated percentages are reported with margins of error based on
95 percent confidence intervals. The margin of error is within +/-2
percent.
[36] Specifically, the SOFS of civilian employees asked employees to
respond to the statement, "Overall, what type of impact do you think
NSPS will have on personnel practices in the DOD." In May 2006,
responses were: 25 percent, negative; 35 percent, neither; and 40
percent, positive. In May 2007, responses were: 48 percent, negative;
30 percent, neither; and 23 percent positive.
[37] Specifically, the SOFS of civilian employees asked employees to
respond to the statement, "Compared to previous personnel systems, NSPS
is worse, neither, or better." The question was not asked in May 2006;
however, in November 2006 the responses were: 44 percent, worse; 41
percent, neither; and 15 percent, better. In May 2007, the responses
were: 50 percent, worse; 35 percent, neither; and 15 percent, better.
[38] GAO, Results Oriented Cultures: Implementation Steps to Assist
Mergers and Organizational Transformations, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-03-669] (Washington, D.C.: July
2, 2003); Office of Personnel Management, Working for America:
Alternative Personnel Systems in Practice and a Guide to the Future
(Washington, D.C.: October 2005).
[39] General Schedule employees in DOD were under either a pass/fail or
a five-level rating system prior to the implementation of NSPS. A pass/
fail system assesses employees' performance as either "passing" or
"failing."
[40] Pub. L. No. 108-136, § 1128 (2003) and 5 C.F.R. Part 250, Subpart
C.
[41] U.S. Department of Defense, NSPS Program Executive Office,
National Security Personnel System (NSPS) Focus Group Report
(Washington, D.C.: February 2005).
[42] According to PEO, many focus group participants incorrectly
referred to the annual General Schedule (GS) pay adjustment as a cost
of living increase, or COLA. The GS pay adjustments are linked to
changes in the Employment Cost Index (ECI), a measure of the overall
rate of change in employers' compensation costs in the private and
public sectors, excluding the federal government. The ECI does not
measure the cost of consumer goods and services, and this adjustment is
in no way tied to an inflation index. Rather, it is an attempt to keep
federal pay in line with private sector pay.
[43] U.S. Office of Personnel Management, Working for America:
Alternative Personnel Systems in Practice and a Guide to the Future
(Washington, D.C.: October 2005).
[44] See National Defense Authorization Act for Fiscal Year 2008, Pub.
L. No. 110-181, § 1106(c)(1)(B) (2008) and 5 U.S.C. § 9902(b)(7)(A) and
(G).
[45] For example, see GAO, Posthearing Questions Related to Strategic
Human Capital Management, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-779R] (Washington, D.C.: May 22, 2003); Defense
Transformation: DOD's Proposed Civilian Personnel System and
Governmentwide Human Capital Reform, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-03-741T] (Washington, D.C.: May 1, 2003); Human Capital:
Agencies Need Leadership and the Supporting Infrastructure to Take
Advantage of New Flexibilities, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-616T] (Washington, D.C.: April 21, 2005); and Post-
Hearing Questions for the Record Related to the Department of Defense's
National Security Personnel System (NSPS), [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-582R] (Washington, D.C.: Mar.
24, 2006).
[46] The National Defense Authorization Act for Fiscal Year 2008, Pub.
L. No. 110-181, § 1106(c)(1)(B) (2008), directs GAO to evaluate the
extent to which the Department of Defense has effectively implemented
accountability mechanisms, including those established in 5 U.S.C. §
9902(b)(7) and other internal safeguards. We identified some of these
safeguards in GAO, Post-Hearing Questions for the Record Related to the
Department of Defense's National Security Personnel System (NSPS), GAO-
06-582R (Washington, D.C.: Mar. 24, 2006). Moreover, GAO has emphasized
the need for internal safeguards since DOD first proposed NSPS (for
example, see [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-
779R].)
[47] The Fourth Estate includes all organizational entities in DOD that
are not in the military departments or the combatant commands, for
example, the Office of the Secretary of Defense, the Joint Staff, the
Office of the DOD Inspector General, the defense agencies, and DOD
field activities.
[48] We were unable to schedule a meeting with the Performance Review
Authority official for Redstone Arsenal, Alabama.
[49] GAO, Military Personnel: The DOD and Coast Guard Academies Have
Taken Steps to Address Incidents of Sexual Harassment and Assault, but
Greater Federal Oversight Is Needed, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-08-296] (Washington, D.C.: Jan. 17, 2008); Military
Personnel: Federal Management of Servicemember Employment Rights Can Be
Further Improved, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-
60] (Washington, D.C.: Oct. 19, 2005); and Military Personnel: DOD
Needs to Improve the Transparency and Reassess the Reasonableness,
Appropriateness, Affordability, and Sustainability of Its Military
Compensation System, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-
05-798] (Washington, D.C.: July 19, 2005).
[50] National Defense Authorization Act for Fiscal Year 2004, Pub. L.
No. 108-136, § 1128 (2003) and 5 C.F.R. Part 250, Subpart C.
[51] In 2007, Human Resources Strategic Assessment Program decreased
the number of respondents surveyed in the Status of Forces Survey of
DOD Civilian Employees from approximately 150,000 to approximately
100,000 per year. This was accomplished by covering about the same
content in a single survey administration that was previously covered
by two surveys each year.
[52] GAO did not monitor or audit the implementation of any of the DMDC
survey processes.
[53] In a few locations, the population of employees with 0 to 5 years
of service was too small to create a sample of 20 employees and
subsequently achieve the 8-12 participants necessary for each of our
groups. As a result, we expanded the population to include employees
with up to 8 years of service.
[End of section]
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